Private trains in India: Hope on track with 120 RFQ bids by 15 firms

October 9, 2020 8:04 AM

L&T, GMR, Cube in the fray; Bombardier, Siemens, Alstom may partner with bidders for rolling stocks biz

Starting with 12 private trains in 2022-23, the railways, according to the current plan, will introduce 45 trains in 2023-24, 50 in 2025-26 and another 44 in 2026-27.Starting with 12 private trains in 2022-23, the railways, according to the current plan, will introduce 45 trains in 2023-24, 50 in 2025-26 and another 44 in 2026-27.

By Nivedita Mukherjee

As many as 15 firms, including Spain’s Construcciones y Auxiliar de Ferrocarrriles, Singapore-based Cube Highways, homegrown L&T and GMR, and state-run BHEL have put in a total of 120 applications among them, in response to a request for qualifications (RFQs) to run 151 passenger trains on 140 pairs of routes divided into 12 clusters. This marks a steady progress of the government’s plan to roll out private rolling stocks on the tracks owned by the monolithic, funds-starved Indian Railways, in its effort to pool in large amounts of private funds to expand and modernise the country’s below-par, insufficient rail network and attendant infrastructure.

The other firms that have submitted RFQ applications are Arvind Aviation, Gateway Rail Freight, IRB Infra, Malempati Power, Megha Engineering, PNC Infra, RK Associates and Hoteliers, Sainath Sales and Services, Welspun Enterprises and the railway’s very own IRCTC.

However, three large multinational manufacturers of trains – Bombardier, Siemens and Alstom – which had earlier evinced interest in the newly available passenger trains business in India by turning up at the meetings convened by the government in this regard, are not on the latest list of RFQ applicants put out by the ministry of railways on Thursday. Analysts say these firms might try and clinch deals with the bidders for rolling stock supplies.

Under the public-private partnership (PPP) model for passenger train operations, private entities have to go through two-stage, transparent competitive bidding, which includes RFQ and request for proposal.

After the scrutiny of the RFQ applications, which is likely to be completed in November, comes the request for proposal (technical/financial bids) stage. The plan is to open the financial bids by March next year and subsequently award the projects in April.

The investments in this first and experimental phase of private passenger trains are estimated to be to the tune of Rs 30,000 crore.

Starting with 12 private trains in 2022-23, the railways, according to the current plan, will introduce 45 trains in 2023-24, 50 in 2025-26 and another 44 in 2026-27.

According to sources, nine RFQs were received for the Mumbai 1 cluster, 12 for Mumbai 2, 10 for Delhi 1, 12 for Delhi 2, 9 each for Chandigarh, Howrah, Chennai and Patna, 10 for Prayagraj, Secunderabad and Jaipur and 11 for the Bengaluru cluster.

So far, the railways’ efforts to bring in private investments in various areas, such as building of tracks and running of private container trains have met with limited success. The stations development programme also met with some hurdles, leading to a sweetening of the norms for investors. It is too early to say whether the investor interest has been kindled even by the latest plan for stations revamp, as the Covid-19 pandemic disrupted the process.

While allowing private train operators was one of the suggestions made by the Debroy Committee on restructuring of the railways, analysts have observed that determination of the track access charges and revenue share will be key to spurring investor interest. They also stress the need for clearly laid-down obligations on the transporter on scheduling and other operational parameters.

Last month at a pre-bid meeting, the potential bidders were told that the fares for private trains will not be regulated by any authority and the private concessionaire will have the autonomy to determine fares.

The railway ministry has, however, told the Lok Sabha recently that it is studying the feasibility of developing a new mechanism for tariff regulations to meet the requirements of private train operators. Responding to a question by BJP MP Nalin Kumar Kateel, railway minister Piyush Goyal said, “A regulatory mechanism with statutory backing is being considered to meet the requirement of changing scenario like private passenger train operators and other public private partnership ventures.”

Commenting on the likes of Bombardier, Siemens and Alstom not being on the RFQ list, Rajaji Meshram, partner-Infra at EY India, said: “They were never expected to bid anyway being rolling stock suppliers. They would have of course attended the pre-bid meetings to understand the procedures because the stakes are high. The speculation right now is that a single entity cannot get more than three clusters, so why would a rolling stock manufacturer like Bombardier want to stick to only three clusters? They can have a deal with bidders of all the 12 clusters.”

Meshram added that these global firms might tie up with the likes of L&T, GMR, etc, for business.

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