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Electricity, power and Indian Railways January 26, 2010

Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Indian Economy, Logistics, Railways, Supply Chain.

Happy Republic Day! Long live the Indian Republic!

On this occasion, just thought I would write something of national importance and jingoistic!

In 2007, India set itself up a plan to get electric power to 100% of its population.

By itself, a great and noble task. From a planning and logistics standpoint, it is a humungous task! Especially, given that 75% of this electricity would be generated by coal.

To meet this ambitious target involves more that just setting up a Power Plant.  It involves the logistics of getting coal from the mines to the Power Plants or in the case of imported coal, the logistics of getting coal from the Ports to the Power Plants.


India currently has an installed electricity generation capacity of 150323MW. Of this 78459MW (52%) is coal based.

How much coal does this translate to?

Coal required per year

78459 MW x 80% Plant Load Factor x 2450 kCal/kWhr Heat Rate x 24hours x 365 days  / 3300kCal Gross Calorific Value of coal= 408million MT per annum1

1 Have assumed no losses and wastage

Coal required per day

408 million MT per annum / 365 days = 1118397 MT/day

Trains to be loaded per day

Assuming that 90% of this coal moves on the Indian Railways network; the balance moves on private Merry-Go-Round network or by road.

90% x 118397 MT/3750 2 MT / rake=268 rakes (train loads)/day

2 Assumes carrying capacity +6 loading


India plans to add 78557MW of electric power generation capacity in the 11th 5 Year Plan (2007-2012) by year 2012.

Out of this 78557MW that would be added, 75%,  58644MW would be generated by coal. 

Coal required per year

58644 MW x 80% Plant Load Factor x 2450 kCal/kWhr Heat Rate x 24hours x 365 days  / 3300kCal Gross Calorific Value = 305million MT per annum

Coal required per day

305 million MT per annum / 365 days = 835616 MT/day

Trains to be loaded per day

Using the same assumption as above,[10% of this coal moves on private Merry-Go-Round network or by road]

90% x 835616 MT/3750 MT / rake=200 rakes (train loads)/day

200 rakes x 3 days average turnaround3 = 600 rakes = 600 x 59 wagons = 35400 wagons + 5% maintenance = 37170 wagons

This calls for an investment of Rs 4000 Crs @ Rs 20Crs ( 1 Cr = 10 million) per rake

3 Wagon Turnaround Time on Indian Railways is 5.2 days. I have assumed 3 days because coal rake lead distance is less as many power plans would be  situated close to the pit-head.


India currently produces about 375million MTPA of coal. The balance demand is met via imports. By 2012, if the plans fructify, India requires an additional 305 million MTPA of coal which is a 81% increase in coal mining capacity in 2 years!!!

305 million MTPA of coal that has to be transported represents a 34% 4 increase in rail freight traffic that has to be carried by the Indian Railways!

4 Assuming Indian Railways will carry 900million MT in 2009-2010

For perspective, freight traffic on Indian Railways for all commodities grew by 280 million MTPA in the 5 years from 2003-2004 to 2008-2009! And if the electricity generation plans have to be achieved, coal traffic alone would increase by 305million MTPA and this has to be achieved in next 2 years!

To generate an additional 58644MW of electricity, an additional 305 million MTPA of coal will have to be transported which implies an additional 200 rakes per day which implies an additional 37170 wagons! This represents a 16% increase in the Indian Railways wagon fleet.

Indian Railways would add 18000 wagons of all types in FY 2009-20105.

5 As per Railway Budget Speech

Most of the coal in India is found in the eastern part of the country served by Eastern Railway, South-Eastern Railway, East Coast Railway and South-East Central Railway.

The railway lines and sections which would be used to transport the coal are HDNs (High Density Networks) which are already critical i.e. these lines are already working at more than 100% capacity utilization. These sections are on the Howrah-Mumbai for coal sent from MCL and SECL to the West and North, Howrah-Chennai for coal sent from MCL to South and Howrah-Delhi for coal sent from BCCL and ECL to North.

To bridge the gap between India’s coal production and demand, coal will be imported. This too will be transported by rakes from the Port. Rail connectivity  between the Ports and Indian Railways network is a weak link. The railway network will not be able to support the imported coal traffic.

There is one more reverse supply-chain that has to be considered. Once the coal is burnt, the flyash has to be disposed off. Indian coal has ~40% ash. Environmental laws would come up soon, which would forbid dumping of ash in flyash ponds. This flyash would have to be transported to cement plants, flyash brick manufacturers et al.


The options and solutions are;

  • Washeries: Invest in washeries to increase capacity of washeries.so that washed coal is transported. This would reduce the transportation requirements and consequently reduce load on the Indian Railways. As a thumbrule, washed coal becomes economically viable at leads greater than 1000kms.
  • HCWs:Induct high capacity wagons with higher payload to tare ratios. Current payload to tare ratio is in the region of 2.0-2.5. Indian Railways has a plan to increase this to 3.5 by introducing Aluminium wagons. BEML has already produced a prototype
  • DFCs: So to move the additional coal train the Indian Railways will have to lay additional railway lines. A DFC [ Dedicated Freight Corridor] for coal traffic alone would be required!

General Rommel, the “Desert Fox” lost the Afrika campaign in World War 2, despite fighting brilliantly because of his weak supply chain.

We in India, have to develop a strong infrastructure and a solid strategy (involving Coal India, Indian Railways and Power Utilities) before we truly win the war on “Electric Power”

It is that in war the victorious strategist only seeks battle after the victory has been won,

whereas he who is destined to defeat, first fights and afterwards looks for victory.

                                                                                                                   Sun Tze – Art of War