How to cut Power Bill through Deemed Licensee - Indian Railway.

How to cut Power Bill through Deemed Licensee - Indian Railway.

New Delhi: Railways is moving to buy electricity from state utilities and central generation companies through open tender as well as through inter-state trading with the aim of paring its power bill by nearly a third, top government sources said.

But the saving, if and when the system is put to practice, would not result in cheaper fares and would be used to narrowing the yawning gap between the railways’ operational costs and earnings.

Another option simultaneously under consideration is to use its ‘deemed licensee’ status, received last year, to wheel cheaper power from any state or generation company through inter-state transmission network. A deemed licensee status allows a consumer to undertake inter-state trading in power.

The railway and power ministries have discussed the issue. Railways is perhaps one of the single-largest power consumers in the country and biggest client of state utilities. The move to buy power through bidding could pinch the state electricity boards. State utilities usually charge a higher tariff from the Railways to cross-subsidize domestic consumers.

Sources said the Railways at present pay Rs 6.5 per unit on an average, even though power is available from coal-fired stations in the range of Rs 3-5 a unit. Under the new plan, Railways, for example, can tie up cheaper hydel power from surplus states such as Himachal Pradesh.

“Even after paying 30-40 paisa as transmission fees, we expect to save up to Rs 2 per unit,” a Railway official said. In 2013-14, Railways paid a bill of around Rs 10,000 crore for consuming 15,170 million units. Against this, it paid Rs 22,000 crore for diesel.

About 24,800 km of tracks, or 38% of the rail network, is electrified at present. These tracks account for 67% of freight and 51% of passenger traffic. The new initiatives would open new opportunities for many generation companies, especially NTPC, which now supplies about 100 mw to railways.