KOLKATA (miningweekly.com) - Indian Railways is pushing for collaboration with coal producers and user companies to build rail connectivity across coal-bearing provinces, to unleash potential additional coal production of 300-million tonnes a year.

Officials said that the Railway Ministry had already prepared a presentation for the new Indian Prime Minister Narendra Modi to push for building railway infrastructure in collaboration with coal producers like Coal India Limited (CIL) and consumers like power generator NTPC Limited.

Such a collaboration would aim to build rail connectivity, linking pitheads to port to power plants, and offering greater leverage to raise the $1.6-billion required, the officials said.

CIL, the country’s largest coal producer, accounting for 80% of domestic coal supplies, has long maintained that the absence of rail connectivity in major coal-producing provinces like Jharkhand, Chhattisgarh and Odisha has been a major hindrance to increasing coal production by at least 300-million tonnes a year.

The miner argued that even in the best-case scenario, CIL would be able to achieve incremental coal production of a maximum of 30-million tonnes a year, since major coal reserves in the three eastern provinces could not be developed without rail linkages to large consumers, such as power plants, and allied evacuation infrastructure, the officials said.

As for the government-owned and -managed Indian Railways, investments in coal freight infrastructure would give a significant boost to the transporter’s revenue considering that rail freight revenue contributed about $7.6-billion, or one-third, of Indian Railways' total annual revenue earnings.

While the creation of rail infrastructure would in the long term reduce the coal import dependency of domestic thermal power plants, it would also reduce the inventory carrying costs of NTPC Limited. Faster evacuation from CIL pitheads would also prevent stock pile-up, the proposals pointed out.

A small beginning had been made by the outgoing government, which had promoted a joint venture between Indian Railways and South Eastern Coalfields Limited, a subsidiary of CIL, for the construction of 180 km and 122 km rail corridors in Chhattisgarh, entailing an investment of around $677-million. However, this investments would need to be ramped up if the full  300-million-tonne-a-year incremental production potential was to be achieved, the proposal said.

Senior officials were also banking on junior Minister Piyush Goyal being allocated independent charge of both the coal and power departments by the Prime Minister. The officials said that this would ensure a coordinated approach by the two interdependent sectors, which had been at loggerheads with each other.

It had been common in the past for power producers like NTPC to complain of CIL’s inability to ensure sufficient coal supplies while the latter blamed power producers for delays in payments and an inability to lift stocks according to schedule, the officials added.