The Hindu Business Line : Rlys uses Nabinagar lever to squeeze out better power rates — UP, Chhattisgarh SEBs ready to cut tariffs

Logistics - Railways
Industry & Economy - Power

Rlys uses Nabinagar lever to squeeze out better power rates — UP, Chhattisgarh SEBs ready to cut tariffs

Gaurav Raghuvanshi

New Delhi , June 11

FOR a long time, it was the Railways chasing the state electricity boards (SEBs), seeking better rates for power. Just an announcement of a captive plant has turned the tables and the SEBs seem to have suddenly discovered the importance of humouring one of their largest customers.

At least two SEBs - Uttar Pradesh and Chhattisgarh - have already approached the Railways and expressed their willingness to reduce power tariffs for the bulk user, a senior Railway Board official told Business Line.

Reliance Energy, which is setting up a 3,500-MW gas-based power plant, has also shaken up the market by offering power at a shade higher than Rs 2 per unit, plus transmission charges. The average rate at which the Railways purchases its power stands at Rs 4.28 per unit.

"Reliance has offered to supply us power at an extremely competitive rate. Its stated bus bar price (cost of production) is about Rs 2 per unit and it is willing to supply at a price slightly higher than that. It cannot attain financial closure till it ties up long-term PPAs (power purchase agreements) for at least 80 per cent of the power they generate. That is why it is tempting us," he said.

The Railways was already buying power directly from National Thermal Power Corporation (NTPC) at Rs 2.38 per unit, but the highest price paid by it for energy stood at Rs 5.70 per unit, the official said.

Asked why the Railways wants to invest in the captive 1,000-MW plant at Nabinagar when other vendors were willing to supply power at a cheaper rate, the official said: "That is the lever which we are already using quite successfully. Our annual requirement is close to 5,000 MW and our captive plant will supply only 20 per cent of our requirement. But it will ensure that the rates being offered by the other suppliers keep coming down." The bus bar cost of power from the Rs 4,560-crore captive plant, coming up as a joint venture with NTPC at Nabinagar in Bihar, would be Rs 2.20 per unit.

This price would continuously keep declining over the years as the plant gets depreciated. After 15 years, there would be no fixed cost and the cost of power would go down to 70 paise per unit at current prices, the official said.

The final tariffs for the Railways from the captive plant would, however, be higher after accounting for wheeling charges to take the power to the place of consumption, he said.