India on track for partial privatization of national rail system

[Gadkari]

India on track for partial privatization of national rail system

Alstom and Bombardier show interest in landmark modernization push

India's national railway system is badly in need of an upgrade, but Indian Railways lacks the financial resources. © Reuters

KIRAN SHARMA, Nikkei staff writerSeptember 28, 2020 14:53 JST

NEW DELHI -- In the first initiative of its kind concerning India's aging national railway system, the government of Prime Minister Narendra Modi is seeking to allow private sector participation.

Among companies that have shown interest during the pre-application process despite the ongoing pandemic are French train maker Alstom, Canadian maker Bombardier and India-based developer GMR Infrastructure.

Under the proposed public-private partnership, 151 privately-operated trains will be introduced in phases starting in 2023. The trains will complement over 13,000 trains that state-owned Indian Railways currently operate on its 68,000-km network. The government expects the investment to total about 300 billion rupees ($4 billion).

The private entities to be selected will be responsible for financing, procuring, operation and maintenance of the new trains, a majority of which will be manufactured in India and designed for a maximum speed of 160 kph, according to the Ministry of Railways.

It will be a significant change for the country's railway system, which first started operation in 1853 during the British colonial era, and requires a massive upgrade in terms of infrastructure, customer satisfaction and new technologies.

A train produced by Bombardier seen in Switzerland.

The Indian government revealed that the Canadian maker expressed interest in the proposed public-private project.

"It is estimated that Indian Railways would need a capital investment of 50 trillion rupees up to the year 2030 for network expansion and capacity augmentation, rolling stock induction and other modernization works," Railways Minister Piyush Goyal told Parliament on Sept. 16.

Cash-strapped Indian Railways does not have the money for such a large investment, hence the government turning to the private sector for help.

"This is a paradigm shift in what [Indian] Railways has been doing," said Amitabh Kant, CEO of NITI Aayog, a government think tank. "This creates a win-win situation for Indian Railways as well as investors by tapping into the potential of the huge unmet demand in passenger business."

New operators will be chosen via a two-stage bidding process: the first stage for submitting qualifications, which closes on Oct. 7, and the second stage for submitting bids.

According to V.K. Yadav, chairman and CEO of the governmental advisory body Railway Board, the bidding process will end in February 2021. After that, it will take about two years to get the domestically manufactured high-tech trains up and running. The contract period will be 35 years.

Train operators will have to pay fixed haulage charges and energy-usage fees. They will also have to fork over a part of their gross revenue to Indian Railways, which will be responsible for providing track access, infrastructure and drivers.

Analysts acknowledge that the public-private railway model could improve efficiency and service, but also warn against being too optimistic about the overall success.

"Well-drafted contractual agreements and adequate clarity in the sharing of risks will be important to sustain this initiative," Acuite Ratings & Research said in a note.

Pointing out that the private players will have to bear the costs of haulage, energy and maintenance, as well as the capital outlays to purchase the train coaches, Ajay Shukla, a former Railway Board member, told a program on ET Now channel: "I do not imagine any private company coming in under the present situation unless they are able to [set] their fares very high."

Many see freedom to set fares as the key to luring private companies.

For decades, governments have remained focused on keeping railway fares low and on offering highly subsidized fares to senior citizens, families of army veterans and others, thus preventing Indian Railways from profiting on its passenger train operations. This has been a politically sensitive issue in India, where the poorest of poor rely on the state-run network for transportation.

In the fiscal year ended March 2018, Indian Railways suffered a loss of 311.28 billion rupees in passenger business "on account of pricing of passenger fares below cost of operations," according to official data submitted to Parliament. Indian Railways has long covered its losses in passenger services with profits from its freight business.
Government policy regarding the freedom to set fares is clear.

"[The] concessionaire will be free to charge a market-linked fare to passengers [of the privately run trains] and will be providing value-added services for food, comfort and entertainment for individualized and enhanced passenger experience," NITI Aayog's Kant said.

India on track for partial privatization of national rail system

Alstom and Bombardier show interest in landmark modernization push

asia.nikkei.com

 

[Gadkari]

GMR And IRCTC Among 15 Players In The Race For Private Train Operations Project

byArun Kumar Das-Oct 8, 2020 11:56 AM

Private train project on track.

Snapshot

• This is the first major initiative of attracting private investment for running passenger trains on Indian Railway network.
  The project is expected to entail private sector investment of about Rs 30,000 crore.

GMR, BHEL and IRCTC are among 15 players who have participated in the request for qualification (RFQ) for the Rs 30,000 crore private train operation project.

Indian Railways, which floated the tender on 1 July, received 120 submissions from 15 applicants to run 140 trains from 12 clusters on its network. These clusters are centred around key urban areas that witness heavy passenger traffic.

However, big domestic players like Tata and Adani and global players like Bombardier are conspicuous by their absence in the bidding process, though a Spanish company has participated in Indian Railways’ first-of-its-kind private venture.

Describing the response as "excellent" the railways said: "In all 120 applications have been received for the 12 clusters, from 15 applicant firms."

This includes 12 applications each for the Delhi 2 and Mumbai 2 clusters, 11 for the Bengaluru cluster, 10 applications each for the Prayagraj, Secunderabad, Jaipur and Delhi 1 cluster and nine each for Chandigarh, Howrah, Patna, Mumbai 1 and Chennai.

The railways had invited RFQs for private participation in operation of passenger train services over 12 clusters comprising 140 pairs of routes through the introduction of 151 modern trains on the network.

Selection of private operators is to be done through a two-stage bidding process. The second stage of the process is a request for proposal (RFP) from the qualifying parties from the RFQ stage.

This is the first major initiative of attracting private investment for running passenger trains on Indian Railway network. The project is expected to entail private sector investment of about Rs 30,000 crore.

Megha Engineering and Infrastructures Limited, Sainath Sales and Services Private Limited, IRB Infrastructure Developers Limited, Indian Railway Catering and Tourism Corporation Limited, GMR Highways Limited, Welspun Enterprises Limited, Gateway Rail freight Limited, Cube Highways and Infrastructure III Private Limited, Malempati Power Private Limited, L&T Infrastructure Development Projects Limited, RK Associates and Hoteliers Private Limited, Construcciones y Auxiliar de Ferrocarriles, SA, PNC Infratech Limited, Arvind Aviationa and BHEL are participants in the RFQ.

Earlier, the prospective bidders sought flexibility on route and timing among other issues in the first pre-bid conference on the private train project.

According to the railways projections, the public transporter will select the companies that will run the private trains by April 2021; the first 12 are expected to start operations by 2023-24, followed by 45 more in financial year (FY) 2024-25, the next 50 in FY 2025-26 and the last 44 by FY 2026-27.

GMR And IRCTC Among 15 Players In The Race For Private Train Operations Project

This is the first major initiative of attracting private investment for running passenger trains on Indian Railway network. The project is expected to entail private sector investment of about Rs 30,000 crore.

swarajyamag.com

 

[Protest_again]

Rolling the Wheels of Freight: Railways registered an impressive growth of 21% in freight loading on 7th October 2020, as compared to the same period last year.

Piyush Goyal is doing a tremendous job with Railways. Once the Dedicated Freight Corridors (DFC) becomes operational in Dec 2021, there'll be a explosion of cargo traffic by rails. I can't wait.

 

[Diggy]

Wonderful news

Jis desh ki sarkar vyapari, Us desh ki praja bhikari
- Nitin Gadkari


And we have the right man for this job as railway minister, Piyush Goyal. Finally I am seeing the required acceleration for reforms in Modi 2.0, the modi govt is using the pandemic adversity to push through reforms.
I was quite disappointed with Modi 1.0 on reforms, there wasn't much intent, but this term looking very promising.


Only one thing, I would like to see Indian companies being given preference during privatization. Once private players enter the scene, Indian Railways will transform into a Indigo like brand for Indian middle class.

 

[Protest_again]

Wonderful news

Jis desh ki sarkar vyapari, Us desh ki praja bhikari
- Nitin Gadkari


And we have the right man for this job as railway minister, Piyush Goyal. Finally I am seeing the required acceleration for reforms in Modi 2.0, the modi govt is using the pandemic adversity to push through reforms.
I was quite disappointed with Modi 1.0 on reforms, there wasn't much intent, but this term looking very promising.


Only one thing, I would like to see Indian companies being given preference during privatization. Once private players enter the scene, Indian Railways will transform into a Indigo like brand for Indian middle class.

Modi reforms have been pretty bold so far in Modi 2.0. I am guessing they are able to push through because they have enough numbers in Rajya Sabha now. Labour codes were introduced in the last session. They are pretty important too apart from Farm reforms.

And the best one in all of the bills is the amendment to FCRA bill giving middle finger to amnesty like organizations. For far too long they in the garb of civil society organizations have halted India's progress at the behest of third countries.

If you are operating in this country, then you should raise money from this country. That way we can be sure that there is a genuine concern in this country on the issue but by getting even the operational income from abroad, they are playing adversarial role in this country at the behest of other countries. If you are a civil society organisation, then it is your job to bridge the gap between people and govt and not increase it. I say good riddance w.r.t amnesty.

 

[Diggy]

Modi reforms have been pretty bold so far in Modi 2.0. I am guessing they are able to push through because they have enough numbers in Rajya Sabha now. Labour codes were introduced in the last session. They are pretty important too apart from Farm reforms.

And the best one in all of the bills is the amendment to FCRA bill giving middle finger to amnesty like organizations. For far too long they in the garb of civil society organizations have halted India's progress at the behest of third countries.

If you are operating in this country, then you should raise money from this country. That way we can be sure that there is a genuine concern in this country on the issue but by getting even the operational income from abroad, they are playing adversarial role in this country at the behest of other countries. If you are a civil society organisation, then it is your job to bridge the gap between people and govt and not increase it. I say good riddance w.r.t amnesty.

They have enough clout to get the bills pushed through , plus they have CBI

Yes I agree, FCRA gave the most pleasure to me , seeing these foreign ngos get a kick. IB has flagged Amnesty and green-peace as security threat. Look the west first aims to create political instability this is why they like to see democracy in every country and where they can't create political instability like in the case of Modi since he has a 2/3rd majority they try create social instability through these ngos. All this to make us weak on negotiation table and get the best deal out of us.

I am expecting many more bills to be pushed through, the issue is after they are cleared they need to be properly implemented, all the dramebaazi of opposition needs to be controlled only then we will reap benefits.

Even in Coal we have seen some good reforms this year which will reduce imports and end monopoly of state owned Coal-India

Good progress made by Modi, we will see its benefits maybe next 3-4 years

 

[hualushui]

Congratulations to the Indians, the train fares are going up