Rlys to invite bids for eastern corridor project

Railways ministry has decided to go for a competitive bidding model to develop the Sonnagar-Dankuni stretch of Eastern Dedicated Freight Corridor after its talks with SAIL-Ircon International combine failed over contractual issues. The ministry planned to award the corridor to the combine on nomination basis.

The consortium of SAIL and railway subsidiary Ircon International had proposed to lay rail lines on the 525-km stretch asking for 15% rate of return on the project. However, no cost estimation was made, leaving the offer open-ended with regard to cost.

Senior officials of the ministry aware of the developments told FE that awarding the project to SAIL-Ircon would have shifted the risk of time and cost over-runs on to the railways, which is already in need of money for other projects. In addition, managing the asset quality would have been the responsibility of the national transporter.

?The consortium could have done a low-quality job and left the project after earning profits. Railways on the other hand would have to operate and maintain the lines, which could prove to be a problem,? one of the officials said requesting anonymity.

Railways is now going to issue a tender to carry out the work. ?The project will be awarded after competitive bidding by companies. This way the developer would have to bear the cost and time over-run risk and would produce a better quality asset,? another official said. The ministry had planned to award the project under public-private partnership model but was preferring doing it on nomination basis.

The 1,804-km eastern dedicated freight corridor from Ludhiana in Punjab to Dankuni in West Bengal is to be completed by December 2016. The World Bank, the lead financier, is not keen on financing the Sonnagar-Dankuni stretch. The multilateral institution is financing the corridor from Ludhiana in Punjab to Sonnagar in Bihar. The stretch between Sonnagar and Dankuni was added after Mamata Banerjee took over as railway minister in 2009 as she wanted to include her home state West Bengal in the corridor.