Railway privatisation – Modi govt invites private players to run 151 trains. Adani, Tata along with These companies leading

Adani Ports, Essel Group, Tata Realty and Infrastructure, Bombardier and Alstom could be in the fray. The Railways Wednesday invited Request for Qualifications for private companies to operate 151 passenger trains on 109 Origin Destination pairs of routes.

New Delhi: Taking the first step in divesting its near-total monopoly in the Railways, the Narendra Modi government Wednesday invited Request for Qualifications (RFQ) for private players for the operation of passenger train services on 109 Origin Destination (OD) pairs of routes through introduction of 151 modern trains.

The Railways had picked about 100 routes to run 150 private passenger trains in December last year. 

The operation of these passenger trains is a part of a project that “would entail private sector investment of about Rs 30,000 crore,” the Railways Ministry said in a statement. 

“This is the first initiative of private investment for running passenger trains over Indian Railways network,” it added.

The announcement of seeking private participation in operating passenger trains could effectively alter the very landscape of the railway network and would for the first time diminish the national transporter’s overarching control on trains, tracks and manpower. 

“Inviting RFQ is just like an expression of interest,” said a senior railway official. “The logistics will be decided gradually… Naturally, the private operators will choose their technology and determine the fare. But certain aspects like safety, time-tabling of trains etc. will stay with the railways,” he added.

Keeping the time-tabling with the Railways would be important to ensure that all the busy time slots are not taken by private players, the official said. 

“RFQ is the first step of the process, in which it will be gauged who are the parties eligible, whether they have the technical know-how or not, etc… After the RFQ, there would be an RFP (Request for Proposal), which can be called the bidding process,” the railway official said.

The official also added the Railways would subsequently constitute a Rail Development Authority — an independent body to decide rail fares to ensure pricing is commensurate with the expenses.

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‘Objective is to introduce modern tech’ 

On private participation in the Railways, the ministry, in its statement, said majority of the trains would be manufactured in India in the future, and the private entity will be responsible for financing, procuring, operation and maintenance of the trains. 

“The objective of this initiative is to introduce modern technology rolling stock with reduced maintenance, reduced transit time, boost job creation, provide enhanced safety, provide world-class travel experience to passengers, and also reduce demand supply deficit in the passenger transportation sector,” the ministry said. 

It further said each train would have a minimum of 16 coaches and be designed for a maximum speed of 160 km/h. 

“There would be a substantial reduction in journey time. The running time taken by a train shall be comparable to or faster than the fastest train of Indian Railways operating in the respective route,” the ministry added. 

Further, the ministry announced that the private entity shall pay fixed haulage charges and energy charges according to actual consumption, and a share in gross revenue determined through a transparent bidding process.

‘Private players will get operations’

In an interview to ThePrint in February this year, Railway Board Chairman V.K. Yadav had said as the Indian Railways bolsters its capacity, it will likely lead to a demand for more trains. 

It is to meet this demand that the government has come up with the idea of private train operators, he had said. 

“It is to meet this demand, we have already invited bids for 150 trains. If you see, it is not a very large number — we run 13,000 passenger trains, out of that 150 is a very small number,” he had said.

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Depending on the success of private train operators, the number can be expanded. However, he had clarified that the existing trains will continue to be with the railways, with operations staying with the transporter too.

“Private players will not get operations — driver, guard, safety certification, infrastructure will remain with railways,” he had said. “Private players will only get on-board services — entertainment, food, cleanliness, passenger amenities, fare collection.”

Indian Railways on July 1 kick-started its privatisation plan with the government inviting requests for qualifications (RFQ) from private players.

The bid is for running 151 trains in 109 pairs of routes. Each train will have 16 coaches. It is estimated that this would attract an investment of close to Rs 30,000 crore.

The plan to allow private entities was started back in 2019 with a bidding process in December 2019. According to an Economic Times report, the first bidding process saw about 20 companies in infrastructure and transportation business express interest.

These include Adani Ports, Tata Realty and infrastructure, Essel Group, Bombardier India and Macquarie group. However, it was before the coronavirus pandemic.

In the post-pandemic world, will the same players bid? At this point it is not clear yet. However, given that these players have implemented multiple infrastructure projects of the government and with the financial muscle they possess, they could be potential contenders.

Adani Ports

Adani group owns one of the largest private railway lines in India that spans 300 km connecting ports and other business hubs for cargo movement. This is in addition to the large scale infrastructure projects the company handles.

The company also has worked with the Ministry of Railways and Metro corporations in different states. In 2019, the company set up its own subsidiary to focus on metro rail projects.

Essel Group

If there is one other group that has the capability and the bandwidth to bid, it would be Subhash Chandra-led Essel Group. The group has been involved in multiple government infrastructure projects for decades.

The group’s foray into railways came in 2018 when it won its first Railway projects.

In 2018, the group’s infrastructure arm Essel Infraprojects Ltd won the first railway project for Rs 17.06 billion on the Eastern Freight Corridor connecting Howrah and Chennai mainline. Its competitors at that time included IRCON International, an Indian Railways infrastructure arm.

Tata Realty and Infrastructure Ltd

It is a 100 percent subsidiary of the Tatas and is the infrastructure arm of the group. The firm was qualified for the Hinjewadi-Shivajinagar Metro in Pune and participated in the bid to lay the underground stretch for Delhi-Meerut Regional Rapid Transit System.

Foreign players

Bombardier

The German firm is the first foreign multinational company to set up a wholly owned railway vehicle manufacturing facility in India, more than 50 years ago. They are one of the largest locomotive suppliers to Delhi Metro and have delivered close to 776 metro cars till date. In May, the company won the contract to supply 210 commuter and metro cars for the Delhi-Meerut Regional Rapid Transit System.

Given their long-standing relationship with the railway ecosystem, they are strong contenders as well.

Alstom

The French infrastructure major has a strong presence in India and employs about 3,600 people. They are currently working on the metro projects across the country including Chennai, Kochi and Lucknow. It has supplied locomotives that are manufactured at its facility in Andhra Pradesh.The company has two more manufacturing facilities in the country. The unit in Bihar is already operational and the Saharanpur plant in Uttar Pradesh is ready to go on stream. Hence the company is well-positioned to participate in railway projects.

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