The railways have protested against what they see as a disproportinate hike in the power tarriff. While the hike for railway traction is almost 21 per cent, industrial high tension user rates have gone up by 12 per cent.

According to data by CR sources, until a year ago, the railways paid charges set between two categories of high tension users. In the latest tariff hike, the MSEB has singled out the railways as the highest charged customer.

Currently, CR pays Rs 4.15 per unit, compared to high tension users in large cities who pay Rs 3.50 per unit and high tension users insmaller towns who pay Rs 3.35 per unit. In contrast, in 1996-97, CR paid Rs 3.43 per unit, a rate that fell between the Rs 3.55 paid by high tension industrial users in Mumbai and Rs 3.35 paid by industrial users in Mumbai

According to railway sources, the issue is not the hike but the fact that rates have been increased disproportionately for the railways. The concern is magnified as fuel is one of the major expense heads for the railways. For instance, CR, which spent Rs 221 on electricity last year, as already spent Rs 195.50 crore this year. They expect to end the year with a bill in the region of Rs 235 crore.

The protest by CR and Western Railway has highlighted the magnitude of problem the Indian Railways face. The increase in power tariff is causing serious concern at Rail Bhavan. Union Minister for Railways, Nitish Kumar has started talks with several state electricity boards asking them to reduce tariff and bring them atleast on par with industrial users.

So far, none of the state electricityboards has reacted to Nitish Kumar's pleas. According to some ministry sources, the states have singled out the railways, as it is a convienent way of getting funds from the centre. Also hiking rates for industrial and commercial users only penalises local industry and invites a backlash.

The rail ministry however has decided not to take this lying down. They have too much at stake. Currently with only 13,962 route kms (22 per cent of the total railway network) is electrified. On these 57 per cent of the freight and 46 per cent of the passenger traffic is being moved.

Since electricity is not only a cleaner fuel, but also provides for smoother movement, the railways has made electrification a priority area. With power tariffs mounting, there are fears that the rate of return on these projects will be severely affected.

Under the current norms, if the financial rate of return on an electrification project is 14 per cent, the project is taken up. The main factors in the cost benefit analysis is therelative cost of diesel and electricity. The hike in electricity is therefore becoming a cause of concern.

Unfortunately for the Indian Railways, regardless of whether the state electricity boards respond to the Union Minister's plea, the electrification policy is irreversible and has to be taken to its logical end.