Public Private Partnership, the latest mantra developed by the mandarins of finance ministry, is their answer to overcome problems of lack of adequate financial resources for developing infrastructure. Increasingly popular with governments and public sector authorities throughout the world, it is supposed to provide infrastructure and civic services for their citizens at a reduced cost. This way it is hoped the public sector could access substantial financial resources of the private sector, enabling it to benefit from private sector technical expertise, experience and efficiency, and transfer project-related risks from the public to the private sector.
A ?toolkit? for PPP developed by the finance ministry covers highways, water and sanitation, ports, municipal solid waste management, and urban transport (BRTS). Railways is conspicuous by its absence as it was too big an animal for the ministry mandarins to figure out as to how to handle it. Besides, Railways has its own financial experts, a trained and dedicated team of officers of the Indian Railway Accounts Service, whose top honcho, the financial commissioner, is the ex-officio secretary to the government of India, as are the other six executive members of the Railway Board.
More than a decade ago, in order to overcome resource crunch, ?own your wagon scheme? was launched by the Railways. It offered, first, a 20% rebate in haulage charges for special purpose wagons which were used only by a particular party. As a result, three rakes of 45 wagons each for mechanised loading and unloading were inducted by Associated Cement Companies for moving in bulk cement from their plant at Wadi in Karnataka to Kalamboli near Mumbai, yielding them substantial economies of scale. NALCO on east coast also financed eight, 45-wagon rakes of air assisted bottom discharge wagons for moving alumina between Damanjodi (Orissa) and Talcher (Orissa). The second type of scheme was for general purpose wagons which went into the general pool but were made available on priority to the investor. It attracted major oil companies who procured about 3,000 BTPN wagons for carrying petroleum.
But Railways? experience of PPP so far has been a mixed bag. Where there have been clear cut areas of responsibility such as the last mile connectivity to ports, the PPP model has been a resounding success. Undoubtedly, it has been a win-win situation for both Railways and the private partner, some of whom have been able to get their greenfield ports up and running, while generating additional freight business for the Railways at no cost to the latter.
Pipavav Rail Corp Ltd, a 50:50 partnership between the Indian Railways and the Gujarat Pipavav Port Ltd, has built a 271-km broad gauge link between Pipavav and Surendranagar junction on Western Railway, to move ISO containers. Adani has also decided to join hands with the Railways in financing the last mile connectivity to Mundra with a
301-km Palanpur-Gandhidham railway line. Tata has also announced its intention to join the PPP league and is busy building a 62-km rail link from Bhadark, a major junction on the South Eastern Railway, to its new port at Dhamra in Orissa.
However, Railways has found the PPP route for setting up new plants to manufacture rolling stock and locomotives full of minefields! Reportedly, its tenders for two mega projects, one for the manufacture of Electric locomotives at Madhepura and the other for Diesel Locomotives at Marhorwa have been hanging fire for quite some time now.
Besides committing Railways for the next 35 years to an MNC, not only to supply locomotives but also a maintenance contract involving supply of expensive spares from the original sources, with little or no possibility of indigenisation, would impose an unrealistic financial burden on the Railways. With little room to manoeuvre, the deal would be a virtual financial time bomb, what with the prevalent atmosphere of nation-wide pastime of witch hunting of every possible facet of government activity. It would be unwise to team up with an MNC, who may induct modern technology but are out to make profits?lots of it?at the expense of the nation?s economy!
Besides Railways already has two very large units, one at Chittaranjan in West Bengal and the other at Varanasi in UP, churning out every year more than 230 electric and diesel locomotives each, which will nicely do for the current as well as the future demand, thank you!
The Dedicated Freight Corridor Corp of India would undoubtedly take care of its own demands for high power locomotives and special types of rolling stock, as and when the need arises.
The writer is a former member, Railway Board. email: acharya@bol.net.in