CIL to spend Rs 700 cr for procuring 40 rakes to carry coal to

For the first time, Coal India Limited (CIL) has decided to procure rail wagons under General Purpose Wagon Investment Scheme at an estimated cost of Rs 700 crore to transport more coal to power plants.

The CIL-owned rakes dedicated to transport coal will help us in pushing higher volumes of coal to the power sector, the mining major said in a statement on Thursday.

"The Maharatna PSU's board has given the green signal to procure 40 rakes at a total expenditure of nearly Rs 700 crore. One rake comprises 59 wagons. According to a rough estimate, one rake can move 1.4 million tonne of coal per annum," the company said.

However, the power sector would have to wait for about two years before the CIL's own rakes begin rolling to support their supply, officials indicated.

"With the life of a wagon spanning 35 years, it would be an asset creation for the CIL," the miner said.

The CIL expects to realise its entire investment on the rakes within a decade as the internal rate of return is financially viable and attractive.

Initially, the rakes would be used to ply in South East Central Railway (SECR) zone in Jharsuguda-Nagpur and Katni northwards and the entire stretch of South Eastern Coalfields Limited (SECL) regions.

The mismatch of SECR carrying capacity and CIL's envisaged growth in coal production in the region was a major reason for the miner to decide on procuring own rakes, the officials said.

Increase in rail transport of coal would offset the transportation of the fuel on road proportionately, they said adding that movement by rail is cheaper and less polluting.