India’s National Investment and Infrastructure Fund (NIIF) and global private equity funds Macquarie, I Squared Capital and Edelweiss Group are among the companies which are keen to lap up the Rs 30,000-crore investment opportunity presented for the first time by the ministry of railways for operation of passenger trains by private sector entities.
“These players were present during the stakeholders meet while the model concession agreement was drafted and have shown their willingness to participate in the privatisation process,” sources said.
When contacted, NIIF, and Macquarie declined to comment while response from iSquared was awaited till the time of going to the press.
On July 2, the ministry of railways invited a RFQ for private participation in operation of passenger train services over 109 pair of routes through introduction of 151 modern trains or rakes. The last date for application under the RFQ is September 8, 2020, and the announcement of shortlisted bidders will happen within 60 days of the application due date.
The rolling stock (wagons, locomotives) operators such as Alstom, Bombardier, CAF and Talgo can see huge opportunity in the privatisation process and are likely to participate in the RFQ and the RFP stage. “Either they can bid themselves or they can lease out to successful bidders. Both the options are available to them under a flexible structuring of the concession agreement. If the rolling stock manufacturer doesn’t want to take the operational risk, it can lease out the rolling stock to the successful bidder. This combination is likely to play out really well,” said Anuja Tiwari, partner, energy and infrastructure, DSK Legal.
Tata Realty and Infrastructure, which is working on modernisation of railway stations, and Adani Group might also have significant interest in bidding for these projects, sources said. However, Adani Group declined to comment.
Manish Saigal, managing director, Alvarez & Marsal, said, that privatisation of the container train operations in 2007 had mixed experience for private players and investors as tariff, railway infrastructure were controlled by Indian Railways. “What can work well for the privatisation of passenger train operations is to see how to bring in better trains and customer experience using better technology and competency while staying competitive on passenger tariff on the routes operated by the private entities. We need to also think of overall commercial viability of this model for private sector, learning from metro and other transport infra models should be considered,” Saigal said.
Arvind Tembhurne, a Mumbai-based investment banker with Ekam Advisors said, there is greater advantage with investment in railways unlike in road sector as there can be no parallel roads that can be set up at a short distance to throttle the cargo movement or affect the competitiveness. “The investors can safely bet on their investments as there are no competitive threats,” Tembhurne said.