Adani to supply 50 MW Electricity to Railways at Rs 3.69 per Unit

Indian Railways have been procuring power through the State Utilities at an average rate of Rs 6.75 per unit. Adani Power Ltd have been awarded the contract at a landed tariff of Rs 3.69 per kWH (unit) for a period of three years,” Indian Railways said in press statement issued after inking the pact

Gautam AdaniIndian Railways on Thursday entered into an agreement with Adani Power for supplying 50 MW electricity at Rs 3.69 per unit for three years, which will result in saving of around Rs 150 crore annually.

“Indian Railways have been procuring power through the State Utilities at an average rate of Rs 6.75 per unit. Adani Power Ltd has been awarded the contract at a landed tariff of Rs 3.69 per kWH (unit) for a period of three years,” Indian Railways said in press statement issued after inking the pact.

Adani Power will supply 50 MW of power from its 4,620 MW Mundra plant in Gujarat.

According to the statement, the agreement between North Central Railway and Adani Power is signed after successful bidding using the model document issued by the Power Ministry.

After clarification from Power Ministry regarding deemed licensee status, Indian Railways have embarked to procure electricity directly from the generators to tariff.

The statement said that this is the first step in migration strategy of Railways for procuring power directly from generators as ‘deemed licensee’ instead of discoms as per the recommendation of Central Electricity Authority (CEA).

Railway Minister Suresh Prabhu said, “It is a big challenge. We have augment revenue and rationalise cost (of operation). We will use mix of energy like solar and buying power directly (as deemed licensee status).”

In his rail budget speech he had suggested that Railways can save around Rs 3,000 crore by rationalising power cost.

“Indian Railways peak consumption is around 4,000 MW which costs Rs 12,000 crore every year. With these initiatives, railways’ cost of power will come down to less than Rs 4 from Rs 6.75, at present,” a senior official said.

The official added, “Railways will buy over 1,000 MW power at around Rs 4 per unit by the next financial year, which will help it save over Rs 1,000 crore annually.”

India Railways is in process of awarding three contracts for supply of 585 MW of power by early next year at less than Rs 4 per unit and save around Rs 700 crore annually.

“19 companies have submitted 44 bids for three contract of supply of 205 MW to Western Railway, 220 MW to Northern Railway and 160 MW to Eastern Railways,” the official said.

Besides, Railways has already inked pact with Ratnagiri Gas & Power Private Limited (RGPPL) for supply of 300 MW at Rs 4.79 per unit. It will eventually get supply of 500 MW from RGPPL at this rate and save Rs 500 crore annually.

The RGPPL is expected to start generating power from November 1. It has been shut since November 2013 due to unavailability of gas.

About Adani Power

Adani Power stock price On October 15, 2015, at 15:31 hrs Adani Power was quoting at Rs 29.10, up Rs 1.05, or 3.74 percent. The 52-week high of the share was Rs 60.00 and the 52-week low was Rs 19.65. The latest book value of the company is Rs 26.50 per share. At current value, the price-to-book value of the company was 1.10.

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