New Delhi: As part of a strategy to reduce its electricity bills, Indian Railways plans to award tenders worth around Rs 8,000 crore to set up a dedicated electricity transmission network.

The national transporter, which announced a Rs 41,000 crore cost-saving exercise earlier this week, will award six tenders. Four transmission links will be set up through the public-private partnership route, and two by Indian Railways itself.

The transmission play by India’s largest electricity consumer comes in the backdrop of Indian Railways buying electricity directly from suppliers of its choice rather than state electricity boards (SEBs). It also has a 1,000-megawatt captive power plant at Nabinagar, Bihar.

“We plan to set up a country-wide electricity transmission network,” said a railway ministry official on condition of anonymity.

For starters, these transmission links will be between Mughal Sarai-Howrah; Delhi-Chennai; Delhi-Mumbai; Mumbai-Howrah; Chennai-Mumbai; and Chennai-Howrah.

Indian Railways has been buying electricity directly from suppliers after being allowed to do so by the Central Electricity Regulatory Commission (CERC), India’s apex power sector regulator (Bihar and West Bengal have challenged the CERC’s order in the appellate tribunal for electricity). However, it is still dependent on state transmission networks to transmit electricity.

“Major international railway networks have their own electricity transmission network. This is primarily driven by the need for reliability and the unique electricity load requirement for railways. The need gets much more pressing given our growing focus on improving the speed of trains,” said the rail ministry official cited above.

Indian Railways needs a so-called shifting load as a locomotive moves from one point to the other.

An increase in speed will help the carrier reduce congestion on its networks, which in turn will help improve its revenue from freight and passenger traffic.

Ashwani Kapoor, member, traction, Railway Board, confirmed the development and said the railways had moved the first tender for a transmission link between Mughal Sarai and Howrah.

In 2014-15, the total energy cost of Indian Railways was Rs 31,220 crore. This included expenditure of Rs 10,436 crore towards electric traction, which carries about two thirds of the total freight, and about 50% of passenger traffic and Rs 2,199 crore for non-traction usage such as manufacturing units, workshops and station areas.

“The bids will be awarded on the framework already developed and adopted by Power Grid Corporation of India Ltd. Each tender will have an order value of around Rs 500-1,000 crore and will have a two-stage bid process comprising a qualification stage and a price-bid stage,” said the rail ministry official.

Experts say a dedicated transmission system will allow Indian Railways more flexibility and independence in its electricity load management.

“For railways it will make sense. Electricity is a big spend. But while this will help the railways, it also showcases the failure of implementation of open access policy in the right spirit,” said Abhishek Poddar, partner and head, energy and process industries, AT Kearney India.

Railway minister Suresh Prabhu on Tuesday unveiled a plan to save Rs 41,000 crore over 10 years through an integrated energy management system. According to Indian Railways’ Mission 41 k initiative, the national carrier will electrify 24,000 km of rail tracks over the next five years by doubling the annual rate of electrification from 2,000 km to 4,000 km in the next two years.