New Delhi: The Indian Railways plans to invest 4,000 crore for setting up rail links to transport coal under the public private partnership (PPP) route to help meet growing demand for the fuel in the country.

“The models seek to create a win-win situation by ensuring payback of investment, mainly through freight apportionment," rail minister Pawan Kumar Bansal said on Tuesday.

“An investment of up to 9,000 crore is expected under these projects, including 3,800 crore for port connectivity projects, 4,000 crore for coal mine connectivity and 800 crore for iron ore mines connectivity improvements," Bansal said.

The plan pertains to the Railways’ Infrastructure for Industry Initiative. A case in point is fuel-starved state-run utility NTPC Ltd, which is offering Indian Railways the money to set up the required rail links.

Mint reported 23 August on NTPC’s proposal to recover the investment by setting it off against freight charges levied by the cash-strapped railways for moving coal.

Indian Railways transports 1.5 million tonnes (mt) of coal every day and moves 52% of the coal that is mined in the country—a share that’s expected to rise to 58% in 2016-17. India has a power generation capacity of 211,766.22 megawatts (MW), of which 57.4%, or 121,610.88MW, is coal-based.

“While coal availability was a challenge, its transportation was a big stumbling block. Such a move will augur well for the sector that is facing a fuel crisis," said Amol Kotwal, associate director, energy and power systems practice for South Asia, at consulting firm Frost and Sullivan.

Coal demand in India is expected to grow from 649 mt per annum (mtpa) now to 730 mtpa in 2016-17, making the country heavily dependent on imports, given the projected availability is only 550 mtpa.