The first captive power plant for Indian Railways is expected to be approved by the Union Cabinet within weeks, setting the wheels in motion for construction of a long-delayed but critical project.
According to people familiar with the matter, the Cabinet note on the proposal for the 1000 MW plant, which will be set up in Nabinagar in Bihar, has been prepared and is expected to be taken up sometime this month.
Once formally approved, the Rs 5,000 crore plant, which will be co-owned by the Railways and NTPC Ltd, would take about two years to be constructed.
"We will save over Rs 200 crore per year on the electricity bill once the plant is commissioned," said Member (Electrical) of the Railway Board, Ramesh Chandra.
"At present, the railways is purchasing power at Rs 4 or above per unit. The power generated from the Nabinagar plant will cost the Indian railways only Rs 2 per unit," said a senior NTPC executive, who did not want to be named.
According to Chandra, it has also been agreed between the Railways and the Power Ministry that the former is free to sell surplus power generated from the plant.
The Railways is expected to consume around 750 MW in order to fulfill the needs of all zones in the eastern and western region. According to Chandra, the power plant will cater to the needs of the most heavily electrified lines in the country which pass through several railway zones on eastern and western India.
NTPC is planning to soon issue a notice inviting tenders (NIT) for the Nabinagar power plant also called the Rail Bijlee Company. While the memorandum of understanding (MoU) for the project was signed as late as 2002 nothing much has happened on the project until recently. There was considerable delay in the finalisation of the project as the Railways’ had demanded that power to be delivered to its doorstep.
NTPC, however, was not willing to do so as it does not have any authority over the grid and does not wants to be involved with the power supply from the project.
The power plant would be a significant milestone for the Indian railways which is on an electrification spree in the last decade. As of now, close to 30 per cent of the total routes on the railway network are electrified. In 2004-05, 47.5 per cent of passenger train kilometres and 62.9 per cent of freight gross tonne kilometres were operated on electric traction.
The project requires investment involves a debt to equity ratio of 70:30. NTPC will be the majority stakeholder with a 74 per cent stake with the remaining being held by the railways. The railways had agreed to bring down their equity share in the proposed joint venture from the earlier proposed 51 per cent due to pressure from the Finance Ministry.