IR signs long-term deal with Petronet LNG to run Trains on LNG

Passengers to brace for a pollution-free train ride soon on Indian Railways!  This agreement will help Indian Railways cut Diesel Costs by 20%

New Delhi: Indian Railways has decided to move towards using Liquefied Natural Gas, commonly called LNG, to run its passenger trains, converting all its exiting locomotives into dual-fuel based.

The driving power cars, which so far have been using diesel as its fuel, would now be retro-fitted to use LNG as well, for the first time, sources said.

The aim is to cut down on diesel consumption by 20%. To achieve this, the locomotives have to be overhauled with enhanced safety features as LNG is a hazardous inflammable fuel, sources in Railway Board said.

The development comes at a time when petroleum prices are now on an uptrend with most oil marketing companies raising retail prices of diesel by as much as Rs 1.80 a litre beginning this week.

In contrast, use of LNG would mean significant savings for the Railways as the country has recently renegotiated a long-term deal with Petronet LNG Ltd in December reworking a 25-year contract with Qatar’s RasGas Co, resulting in prices dropping by almost half. Petronet – India’s largest LNG importer as on date, to revise the 7.5 mtpa LNG import deal terms significantly cutting the price accordingly.

Under the initial deal signed in 1999, Petronet agreed to pay about US$13 per million British thermal units, while the revised price is reduced to around US$6 to US$7, according to India’s minister for petroleum and natural gas, Dharmendra Pradhan.

The two companies said in a joint statement last week that the revised price will be linked to the oil index that closely reflects the prevailing oil prices.

Additionally, Petronet has avoided paying the US$1.5 billion penalty for taking less LNG than it contracted for 2015, but under the new agreement, it will have to take and pay for all of the volumes it has not taken in 2015 during the remaining term of the 25-year SPA.

Petronet also agreed to buy additional 1 mtpa of LNG from RasGas for further sale to Indian Oil, Bharat Petroleum, GAIL and Gujarat State Petroleum, with the delivery starting in 2016.

Indian Railways has firmed up the plan under which it would convert existing and new driving power cars of diesel-run trains, called DEMUs into dual-fuel system.

Initially, all Cummins 1400 HP engines would be taken up for conversion, which are either new or freshly-overhauled engines done after 18,000 hours of run.

Since LNG is seen as a highly hazardous material, safety has to be uppermost in the mind of the manufacturers, sources said.

The converted driving power cars should have safety and protection features for engines and manufacturers should demonstrate its safe and trouble-free field operation.

The system offered should also have suitable safety devices for the safe operation of LNG storage, which can only be sourced from manufacturers having a minimum three years’ experience in manufacturing and supply of such LNG tank systems.

Retro-fitting the LNG tank has to be carefully done as it has to be mounted on a moving platform moving at high speed, needing automatic safety system and alarm with manual override systems, Indian Railways documents mentioned.

Indian Railways have been toying with the idea of using alternative environment-friendly fuel to partially replace diesel that runs its locomotives.

Use of Compressed Natural Gas as an alternate fuel has been experimented upon on DEMU engines to see the environmental impact and studies by Research Design and Standard Organisation, the R&D wing of the Railways, showed 30% savings in operation and maintenance cost of about Rs 27 lakh per engine per year. However, using LNG is more economical for commercial operations.