NTPC places order of Rs. 10,000 crore with Indian Railways

India’s largest energy conglomerate, NTPC awarded a contract of Rs. 10,000 crore to the Indian Railways. The scope of work involves transporting coal from mines to all NTPC’s plants through the fiscal year 2020. 

The order is a respite for the cash-starved Indian Railways as NTPC has agreed to fork over the entire amount in advance in three instalments. In return, the Indian Railways are offering NTPC some benefits by way of fixed prices for the remaining fiscal year as well as the next fiscal. Additionally, NTPC will also receive a preferential allotment of rakes. This secures NTPC’s interests on three chief fronts – the contract will reduce NTPC’s cost of transportation of coal, lessen transportation time and render it immunity from any upcoming revision in rail tariffs. 

NTPC has already initiated an advance freight payment of Rs. 2,000 crore. The remaining instalments shall be paid during the current fiscal. 

On Tuesday, the shares of NTPC Limited opened at Rs. 159.15 per share and hit a high and low of Rs. 160.60 per share and Rs. 157.40 per share, respectively. At 9:35 am, the stock was trading at Rs. 157.40 per share, down 1.10 per cent.