The Ministry of Railways is canceling the tender for running 151 private trains along 109 major routes.
It will reevaluate the process due to weak response on the bids from private players.
The Clusters Up For Grabs
Only 3 out of the 12 clusters up for bidding saw any response.
Two of the 12 clusters would be in Delhi and Mumbai each.
Finally, there would be one cluster each in Secunderabad, Chennai, Howrah, Jaipur, Prayagraj, Chandigarh, Bengaluru, and Patna.
Only Two Bidders Respond
The Indian Railways had, in July last year, started the process of allowing private trains on 109 routes.
But only 2 bidders expressed any interest- the Indian Railway Catering & Tourism Corporation (IRCTC) and Megha Engineering & Infrastructures.
This prompted the government to reconsider the purpose of bringing in private players to run trains.
Conditions To Be Fulfilled By Potential Bidders
As part of the process, bids were sought by private entities which would have to invest Rs 30,000 crores and manufacture 70% of the rakes in India.
This might have been a pain point for potential investors since the Make In India clause served to give significant bargaining power to domestic manufacturers.
Additional responsibilities include financing, procuring, operating and maintaining the trains.
The winning bidders would be allowed a concession period of 35 years on a revenue basis model.
The Government’s Ambitions
When the national carrier introduced private trains on its network last year, it had planned for the first dozen to start running in the 2023-24 financial year and all 151 by 2027.
The Railways was scheduled to select the private entities to run the private trains by April 2021.
This was aimed towards opening up one of the government’s most prominent enterprises.
The general public would also be benefitted by the infusion of modern technologies which would result in world-class services.
What Went Wrong?
The initial Request for Qualification (RFQ) last year saw response from 16 private sector firms.
Some of these firms include:
- GMR Highways Ltd
- Indian Railway Catering and Tourism Corporation Ltd (IRCTC)
- IRB Infrastructure Developers Ltd
- Cube Highways
- Infrastructure III Pte.Ltd
- CAF India Private Ltd
However, the number dipped significantly in the recent RFP stage (financial bidding) wherein only 2 bidders stepped forward- IRCTC and Megha Engineering and Infrastructure Ltd.
Reasons Behind Pulling Out
The ones that backed out cited concession rules favouring the Indian Railways as reason for doing so.
It is also being speculated that other reasons behind most of the players backing out are the absence of a regulator and having to pay haulage charges on top of revenue sharing.
The lack of interest by private entities could also be attributed to curbs on route flexibility along with penalties on non-compliance with the performance indicators written in the concession agreement.