Railways procures 50 MW power from market through open bidding

Electricity through open tender to cost Rs 3.69 per unit lower than average cost of Rs 6.7 procured through the state utilities

Although a bulk consumer, Railways pays extremely high charges for traction power. It has been procuring power through the State Utilities at an average rate of Rs 6.75 per Unit.

In this year's Railway Budget speech it was announced that "Railways proposes to procure power through the bidding process at economical tariff from generating companies, power exchanges, and bilateral arrangements. This initiative is likely to result in substantial savings of at least Rs 3000 crore in next few years". Railway Ministry initiated step to fulfil this announcement.

 

After issue of Clarification from Ministry of Power (MoP) regarding deemed licensee status, Railways have embarked to procure power directly from the market in a bid to reduce the electricity tariff.

Accordingly, Railway PSU namely Railway Energy Management Company Limited (REMCL) on behalf of North Central Railway (NCR) for the first time invited Bids under Case - 1 bidding as per the Model Tender Document issued by Ministry of Power (MoP). A number of power companies participated in this open bidding process. At Request for Qualification (RFQ) stage, 10 bids were received. Later, at the stage of financial bid i.e. at Request for proposal (RFP) stage, 7 bids were received. Against this competitive bidding process, M/s Adani Power Limited emerged successful bidder and have been awarded the contract for supply of 50 MW power at a landed tariff of Rs. 3.69 per unit for a period of 3 years. This is fulfillment of one of Budget announcements

Upon commencement of this power supply, an annual saving of about Rs 150 crore is expected in electricity bill as compared to the earlier tariff of NTPC power.

In the presence of Minister of Railways, Suresh Prabhakar Prabhu, an agreement for power procurement between North Central Railway and M/s Adani Power Limited was signed on 15 October 2015.

Speaking on the occasion, Minister of Railways Suresh Prabhu said that Agreement for Procurement of Power (PPA) for procuring 50 MW economical traction power supply is a welcome move. He pointed out that the Railway is committed to go in a big way in reducing its energy bill through an appropriate energy mix, procuring energy through bidding and using alternative sources of energy. He said that Indian Railways has already embarked upon on solarisation work in great measure. The solarisation efforts of Indian Railways will also help reduce cost of electricity for railways. He informed that Ministry is soon coming up with a PPP model to utilize rooftops and vacant land spaces of Railway establishment for generation of solar energy.

This is a landmark initiative as it is the first step in migration strategy of Railways for procuring power directly from market. This is as per the recommendation of Central Electricity Authority (CEA).

The Ministry has drawn a complete action plan of sourcing power through open access. For this purpose another Tender has been floated for procuring 585 MW power from market for various Zonal Railways.

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