Idle coal trains wait for $64 billion India power reform to bite

Coal shipments were 30 million tonnes below target in the five months ended August, equivalent to a loss of Rs3,000 crore ($449 million) in railway freight revenues


Indian Railways used about 188 trains daily in August to transport shipments for state-run Coal India Ltd, less than the 253 per day expected. Photo: Mint
Indian Railways used about 188 trains daily in August to transport shipments for state-run Coal India Ltd, less than the 253 per day expected. Photo: Mint

New Delhi: Fleets of coal trains lie empty across India each day, a sign that Prime Minister Narendra Modi’s landmark reform of the electricity sector remains a work in progress.

Indian Railways used about 188 trains daily in August to transport shipments for state-run Coal India Ltd, less than the 253 per day expected, according to Mohd. Jamshed, a member of the board that helps to run the network. Asia’s No. 3 economy depends on coal for most of its electricity.

“We built up the capacity in consultation with the coal sector, but the demand hasn’t moved as expected,” Jamshed said in an interview in New Delhi. Coal shipments were 30 million tonnes below target in the five months ended August, equivalent to a loss of Rs3,000 crore ($449 million) in railway freight revenues, he said.

Provincial electricity distributors in India—weighed down by debt after years of selling supplies below-cost to keep them within reach of the poor—are struggling to buy more power from underutilized generators, leaving coal trains stranded. The government’s reform of the distribution sector to alleviate the $64 billion debt burden and curb retailers’ losses is supposed to be completed by 2019.

Sixteen of India’s 29 states and seven union territories have so far agreed to participate in the overhaul of electricity distributors. Utilities had debt of Rs4,30,000 crore as of 30 September last year, according to the government. The 16 provinces will be restructuring Rs2,50,999.9 crore of that, an official release shows. Bloomberg

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