Railways may buy private power

Plans to issue open tenders for electricity in Uttar Pradesh and Tamil Nadu.

Indian Railways is set to end the public sector monopoly for purchasing electricity. It has issued expressions of interest for appointing consultants for advising it on purchasing power from independent power producers.

At present, the Railways meets its entire electricity needs, estimated at over 10,000 million units, from the state electricity boards (SEB) and National Thermal Power Corporation Ltd.

The Railways is expected to issue open tenders in Uttar Pradesh and Tamil Nadu, for which a study has been commissioned. "The proposal is at an initial stage, where the consultants appointed would first give a feasibility report," a senior ministry official said.

The electrical wing of the Railways today held preliminary discussions with prospective consultants.

Railways also wanted to ascertain if the SEBs could be approached for open access wherein it can choose its own supplier, the official added.

The move is expected to help the Railways to purchase electricity at lower prices. At present, the per unit cost of electricity is estimated at Rs 4.38.

Officials added that buying power from independent power producers would also help Railways to reduce its transmission costs. Due to the restricted supplier base, which has its own transmission lines, the cost of power goes up when the power wheeling charges are included. Open access, has been allowed for entities like the Railways since 2003, when the new Electricity Act was enacted.

Earlier, it was mandatory for the Railways to approach the SEBs to satisfy its demand for power.

That the private players will be ready to grab the opportunity is evident from the fact that companies like BSES Ltd had approached Railways a few years ago for supplying power.

It had, however, opted for competitive bidding. "We want to give all companies, whether private or in the public sector, an equal opportunity," an official said.