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POV : Viability of NTPC's plans to explore inland waterways for transportation of coal

By , ,
Industry : Coal

NTPC recently tied up with Inland Waterways Authority of India for exploring inland waterways for transporting coal to its fuel starved power plants at Farraka and Khelgaon. These projects have been facing coal shortage for over a year on account of inadequate rail infrastructure. How successful would NTPC's initiative be?

Shri Sunil Kumar,Vice-Chairperson,Inland Waterways Authority of India

The railways are over stretched. On certain routes, railways are operating at 120 percent of their line capacity. It is, therefore, natural for companies to look for an alternate option and water transport offers many benefits. Inland waterways transport (IWT) is widely recognised as a cost effective, fuel efficient, safe and environment friendly mode of transport, particularly for bulk goods, such as coal, food grains, fertilisers, iron-ore, steel, cement and other construction material, POL, over dimensional cargo and hazardous material. Since these goods are transported in very large quantities to various industrial units, road is practically not a viable mode of transport for these. All these years, IWT remained totally neglected in our country due to which it has lost its significance in the overall inland transport network and industries. It is time that industry looks at this as a practical alternate option. I feel that this can easily supplement the railways and help to meet the growing logistics requirement of the industry.

Considering that the railways have a vast network in the country and all the power plants have railway linkages with coal mines right from the conceptualisation of projects, it will not be correct to say that the IWT will replace the railways for transportation of coal. However, the inadequate capacity of the railways to supply coal to the power plants and the fact that most of the power plants also import coal, the waterways can effectively supplement the railways wherever they can be developed to make commercial operations viable.

As thermal power plants have to be located near a perennial source of non-saline water and most of them use imported coal to the level of 15-20 percent of their total requirement, there is good scope. However, the port of import of coal should have a viable connectivity with inland waterways.The waterways could then become a permanent viable mode of transportation of imported coal from the port to the power plant. In some cases, even domestic coal can be dispatched by the waterways, if the coal mines have connectivity with a port such as Talcher coal fields and Brahmani River.

This project with NTPC is conceptualised with total private sector funding. The bids for this project have already been floated and the last day of submission was March 15, 2011. To make this initiative viable in the long term, individual projects for transportation of coal for the various power plants located on waterways such as Ganga and the Brahmaputra would need to be conceptualised and developed.

There are no major concerns as such except that the IWT sector having remained totally neglected in the country, the power plants do not consider it as a viable mode when a new plant project is conceived. If the power plant develops IWT infrastructure such as berthing jetty near the power plant and conveyor system for carrying coal from the berthing jetty to the coal stack yard (as they do in railways), the connectivity with IWT for transportation of coal can be sustained and it can become popular.

Besides the Ganges (NW-1), the Brahmaputra (NW-2) can provide good connectivity for transportation of coal to various thermal power plants already located or those planning to come up in the near future. Brahmani River from Talcher to Dhamra (National Waterway-5) has huge potential for transportation of domestic coal from Talcher to Dhamra. Any other thermal power plant located on a creek can also use waterway for ferrying imported or domestic coal. If the project is found technically feasible and commercially viable, there is no reason that the private sector would not be interested for using IWT for transportation of coal. Jaypee Group, who is likely to develop new thermal power plants at Bara and Karchana near Allahabad in UP, has already started exploring the possibility of transportation of imported coal from Haldia to these power plants through Ganga. They have appointed WAPCOS as their consultants.

NTPC,,

At present, the rail infrastructure available to transfer coal is limited. Consequently, we are not able to transport the required amount of coal to these stations. This prompted us to look for other options. The waterways transport has always been cheaper than road or rail. We are positive that in the long run it will work out as an economic proposal. We are only able to transfer 20 MT of coal to these stations against the present requirement of 30 MT, as the existing infrastructure is inadequate. The waterways would be used to meet the additional unmet requirement in addition to the railways. The viability of the project would depend on project merit evaluation by investors. We can only provide them the security of payment of the transportation charges and long term cargo assurance. We have already invited bids from the parties to submit their proposals for indicating the transportation charges. The conference was held on January and we got a good response from 25 parties. Considering the enthusiasm of these parties, I don't see any major issues in the project.

Dipesh Dipu,Director - Consulting, Energy and Resources - Mining ,Deloitte Touche Tohmatsu, India

The waterways typically offer better economics of transportation. The capital costs may be only 10-15 percent of the capital costs of constructing railways or roadways. Dredging may be required at times, but maintenance costs are also substantially low--estimated at 20 percent of maintenance cost of railways. The cost of transportation is also low, since fuel consumption per tonne per kilometre is lower. The additional advantage is that the connectivity of inland waterways with sea transport can be convenient and cost effective.

India is believed to have about 14,500 kilometres of navigable waterways, of which nearly 3,600 kilometres are navigable by larger vessels. However, only about 2,000 kilometres are used. Hence, it may have the potential to supplement the rail infrastructure. Sensing the opportunity, Inland Waterways Authority of India has designated five National Waterways. The National Waterway 1, which connects Haldia to Allahabad, may have the potential for coal transportation. The power plants in Uttar Pradesh and adjoining areas which require imported coal may use it. To begin with, the waterways need to be studied for technical and commercial viability perspective for coal transportation. The waterways will also need to be connected to the power plants and coal mines through development of adequate infrastructure backbone. Environmental concerns have to be also examined.

Potable water resources are scarce resources and large section of population has dependence on rivers for drinking water supplies. River waters also provide livelihood to rural masses. Impact of scaled up transportation on these aspects must be assessed. This along with several technical parameters will determine the capacity of the waterways. For now, eyes set are on the NTPC initiative.

Rivers in northern India originating from the Himalayas are perennials but they are observed to have higher degrees of silting, while some of them also change course. The rivers in the south have significant variations in volumes of water. These could be technically challenging. There may also be environmental and social concerns.

(InfralineEnergy thanks NTPC, Sunil Kumar and Dipesh Dipu for sharing their insights. Infraline introduces "Points of View" as an initiative for encouraging dialogue between various stakeholders of the Indian energy sector on contemporary subjects. If you wish to participate in such initiative, please write to feedback@infraline.com).