The Indian Railways, which was granted permission by the Central Electricity Regulatory Commission (CERC) for procuring electricity directly from power generators, is facing opposition from the state governments of West Bengal and Bihar.
The two states have challenged the CERC order granting deemed distribution licence status to the national carrier under the Electricity Act, 2003 in November 2015, leading to the railways being treated at par with distribution companies.
The matter is currently in the appellate tribunal for electricity which was set up following the Electricity Act.
The railways currently consumes 18 billion units of electricity annually drawing a bill of around Rs.10,000 crore. It expects to reduce the input cost to the railways by Rs.3,000 crore annually if it buys electricity directly from generators rather than state electricity boards’ distribution companies.
“Bihar and West Bengal have challenged the order of CERC which gave the deemed licence 14 May, though the appellate tribunal for electricity has said in-principle the order of CERC is upheld. As far as the law is concerned, it is on our side,” said a senior official at the ministry of railways requesting anonymity.
The Indian Railways contracted about 500 megawatt (MW) power from Ratnagiri Gas Power Pvt. Ltd for consumption in Maharashtra, Gujarat, Madhya Pradesh and Jharkhand at about Rs.4.70 per unit.
It further got 200MW power from 47 traction sub-stations in Maharashtra starting 26 November last year. In addition, railways, through its company Railway Energy Management Co. Ltd, contracted 50MW power through open tendering system at Rs.3.69 per unit in its central transmission utility-connected network from Dadri to Kanpur in Uttar Pradesh. This 50MW power flow started 1 December 2015.
InfraCricle on 9 November reported Rajasthan has given approval for providing no-objection certificate (NOC) to the Indian Railways for procuring power directly from other generators.
“We are getting electricity from Ratnagiri Gas and Power Pvt. Ltd at Rs.4.70 per unit. At the moment, we have been granted NOC by Gujarat, Madhya Pradesh, Maharashtra, Uttar Pradesh and Jharkhand. We also have soft commitment from Rajasthan and Chhattisgarh. Our main problem is Bihar where we have the Nabinagar power house from which we have to evacuate energy. In that 110MW unit, 90% is our share,” said the official quoted above.
CERC in its judgement on November 2015 had clarified that the railways was an authorised entity under the Railway Act to undertake transmission and distribution in connection with its working.
India’s apex electricity regulator further directed all regional and state load dispatch centres and state transmission utilities to facilitate the railways’ medium- and long-term access from generating units and other sources to the railway network, according to a note issued by the ministry of railways titled ‘New Paradigm of Electric Power Procurement’.
“The matter is still with the appellate tribunal,” said a CERC official requesting not to be named.
Queries emailed to the spokespersons of the ministry of railways, CERC and the state governments of West Bengal and Bihar on 16 November remained unanswered.
According to experts, the Indian Railways should be allowed to procure electricity legally according to the Electricity Act.
“As the matter is sub judice, it is the decision of the appellate tribunal which will be watched. However, personally in my opinion according to the Electricity Act the Railways should be allowed to procure electricity,” said Abhaya Agarwal, partner at consultancy firm EY.