RailMin takes yet another shot at Indian Railways private trains

Almost four months after scrapping ₹30,000-crore bids for private trains, the railway ministry has initiated fresh discussions with the industry to put in place the necessary tweaks in the bidding criteria, and provide adequate incentives to the private sector to operate passenger trains on a public private partnership (PPP) basis. Fresh bids are likely to be invited with altered bidding criterion soon.

“Railway ministry has kick-started deliberations on PPP in private passenger train operations with the industry all over again,” a top source told Fortune India on condition of anonymity

During the preliminary rounds of discussion, the private sector is said to have raised concerns over high haulage charges, mandatory domestic procurement of rolling stock, and high punitive charges for failure to stick to key performance areas such as punctuality.

During the erstwhile bids worth ₹30,000 crore rolled out by the ministry in July last year, the bidders were supposed to pay a predetermined haulage charge over and above the revenue share. According to top sources in the ministry, fresh bids are likely to see some changes in the haulage criterion. “We are looking at various options, one of them being working out the current charges applicable on haulage of existing premium trains, including Rajdhanis and Shatabdis. A gradual reduction in the haulage charges over the period of concession is also being examined,” a top railway ministry source told Fortune India on condition of anonymity.

Another criteria that may be altered in the revised bids pertains to the mandatory 70% procurement of rolling stocks domestically. The provision in the erstwhile bid, which aimed at providing a fillip to the ‘make in India’ initiative may not remain mandatory in the revised bid. In its place, the government is likely to introduce tax breaks and subsidies on domestic procurement, according to sources in the ministry.

There is no clarity on the timeline of the revised bids, but they can be expected soon, according to railway ministry sources.

In response to a question in the Lok Sabha last week on the tender to run passenger trains on PPP model, railway minister Ashwani Vaishnav had said, “The tender committee, after due deliberation, has recommended for discharge of the tender. Competent authority has accepted the recommendation of the tender committee.”

In response to the tender for private passenger trains floated by the Ministry of Railways in June last year for 12 clusters with 109 origin — destination pairs — 120 applications were received from 16 players in the request for qualification stage. Companies who participated in the first round of bidding included names like IRB Infrastructure, GMR Highways Ltd, PNC Infratech Ltd, and Cube Highways and Infrastructure Pte, among others. Out of the total number of applications, 102 were shortlisted for the next round of bidding.

However, when the financial bids were opened in July this year, only two players – Indian Railways Catering and Tourism Corporation (IRCTC) and Megha Engineering and Infrastructure Ltd — had put in Rs 7,500 crore for only two clusters. While IRCTC had offered a 10% revenue share, MEIL offered just 1%.