Coal India plans to spend Rs 700 crore to purchase its own wagons to despatch fuel for the power sector.

The board of the public sector miner has given its approval to procure 40 rakes under the General Purpose Wagon Investment Scheme of the Indian Railways. One rake comprises 59 wagons and a rake is estimated to move around 1.4 million tonnes of coal per annum.

Coal India expects to realise its entire investment on the rakes in a decade and with the life of the wagons spanning 35 years, it would be an asset creation for the miner as well.

“These CIL-owned rakes will help us push higher volumes of coal to the power sector,” a Coal India official said.

The Telegraph in January had reported that Coal India had renewed its interest in having its own fleet of wagon under the scheme. The earlier plans did not take off as there was no return on investment for it even though there were benefits of faster coal evacuation and offtake.

Initially, the rakes would be used to ply in the South East Central Railway zone in the Jharsuguda-Nagpur and Katni region covering the Ib Valley coalfield area and the entire stretch of South Eastern Coalfields Ltd where production is expected to perk up, catering to the demand of 15 power plants in the region.

The wagons selected by Coal India have a higher carrying capacity of 80 tonnes against the conventional 70 tonnes. During 2018-19, Coal India loaded 236 rakes per day on an average, which is expected to climb to 400 rakes per day in the coming years. in line with the increase in production volume closer to a billion tonne over the coming years.

Increase in rail transport of coal, which is cheaper and less polluting, would offset the transportation of the fuel on road proportionately.