Private Companies Not Interested In 75% Of Private Train Routes; Only These 2 Firms Placed Bids

Of the twelve clusters offered by Indian Railways for ‘public-private partnership’ (PPP) on July 23, only three clusters were reported to have attracted financial bids.

In October 2020, the Railways had received 120 request for proposal applications from 16 firms, including BHEL, L&T Infrastructure Development Projects and GMR Highways.

This is part of the Union government’s plan of bringing in private companies to operate 151 modern trains on 140 origin-destination pairs of routes, divided into 12 clusters.

Despite receiving 120 applications, it was disappointing for the railway ministry to have received minimal financial bids for only three clusters out of 12.

Government’s Plan of Independent Clusters

In September last year, Niti Aayog had informed about the two major initiatives for which Railways was seeking private investment.

• Passenger trains will be run by private operators on the Railways’ existing networks, and
• Revamp and redevelopment of railways stations all around the country.

It clarified that Indian Railways was offering a part-privatisation, which would result in a win-win situation not only for private players and Indian Railways but also the end users.

Through this, Railways is looking forward to attract Rs 400 crore from private investors.

You can read all about the advantages of this public-private partnership here.

Indian Railways identified 12 independent clusters having 109 origin-destination routes, on which private players are expected to operate about 151 passenger trains.

The 12 independent clusters are,

• Bangalore
• Chandigarh
• Chennai
• Delhi 1
• Delhi 2
• Howrah
• Jaipur
• Mumbai 1
• Mumbai2
• Patna
• Prayagraj
• Secunderabad

IRCTC, Sole Bidder for Mumbai-2 Cluster

As per a statement released by the railway ministry on July 23, it had received bids from private and public sectors to operate 29 pairs of trains with around 40 modern rakes, entailing an investment of around Rs 7,200 crore.

“The ministry will expeditiously complete the evaluation and decide the bids. This is an entirely new attempt to bring world-class trains through public-private participation (PPP) in India”, added the statement.

However, only three clusters, Delhi-1, Delhi-2 and Mumbai-2 received bids from minimal bidders, while the Indian Railway Catering and Tourism Corp. (IRCTC) turned out to be the only bidder for the Mumbai-2 cluster, quoting 18% revenue share.

The Delhi-1 cluster saw two bidders, IRCTC and Megha Engineering and Infrastructure Ltd, quoting contrast revenue shares of 15.3% and 2.16%, respectively.

The Delhi-2 too saw bids from the same two bidders with IRCTC quoting revenue share of 6.3%, while the other for 0.54%.

It appears like IRCTC will win the position here.

New Tender Likely to Release for 9 Left Out Clusters

Of the 12 clusters, only 3 attracted bidders, that too only 2 bidders, of which one was a state-owned body. It is likely that a new tender will be put out for the 9 clusters that did not receive a single bid.

Livemint states that of the 120 applications received from 16 applicant firms, 102 were found eligible to participate in the request for proposal stage for the introduction of 151 modern trains.

Over 12 firms, including Cube Highways and Infrastructure III Pte. Ltd, GMR Highways Ltd, Spain’s CAF Group’s consortium, Welspun Enterprises Ltd and state-run Bharat Heavy Electricals Ltd, had qualified to place financial bids.

Cube Highways, GMR Highways, MEIL and IRB Infrastructure qualified for all 12 clusters.