Addressing a joint press meet along with Railway Board chairman VK Yadav, Niti Aayog CEO Amitabh Kant said on Thursday (Sep 17) the part privatization of the railways will create a win-win situation for both the Indian railways as well as the investors, and also the rail users.
During the press meet, the Railway ministry provided details on the roadmap, timelines and implementation framework for two major initiatives for which the national transporter is seeking private investment- running of passenger trains by private operators on the existing Railways network and redevelopment of railway stations across the country.
According to Indian Railways, these projects could potentially usher in an investment of over $7.5 billion in the next five years. Railways is hoping to attract $4 billion investments with private passenger train services.
Stressing the need to induct private operators in the Indian railway network, NITI Aayog CEO Amitabh Kant on September 17 said competition would promote efficiency and might result in reduced fares, for both passenger and freight segments. Kant said he was happy and satisfied happy with the progress made on the station redevelopment front.
“Railways, highways and airports are drivers of growth and this is the right time for these measures to counter the COVID-19 setback. We are not privatising Indian Railways. This is a public-private partnership. Private entities will source and operate trains using the Indian Railways infrastructure. This is a win-win situation for the private sector and Indian Railways. We want railways to be the major driver of India’s growth story,” he said during the presser
“It is like when private banks were set up in India. So many private players came in the banking sector. But that didn’t lead SBI to shut. Private investment will bring in newer technologies. It will create competition in the railway sector. Competition will increase efficiency and reduce fare — in the long run,” Kant added.
Private Train Operations
The Railway detailed out the operating framework for private participation in Passenger Train Operations. According to the national transporter, some of the reasons to invest in this project are proven unmet demand, long term concession, established infrastructure, operational freedom. During the year 2019-19, the total originating non-suburban passengers was 3.65 billion and the number of waitlisted passengers was 88.5 million.
The private train operator will be responsible for
- Finance, design, procurement, maintenance, operation of trains
- Setup or upgradation of the depot for train maintenance.
- Fulfilment of KPIs on punctuality, reliability and upkeep of trains.
- Sourcing trainsets via domestic production in a phased manner (only three trains can be imported).
The Indian Railways will provide
- Access to track and other fixed infrastructure a
- Right of way, access to depot site as well as access to washing line
- Priority at par with Indian Railways’ premium trains.
- Loco pilot and guards.
Indian Railways has identified 12 independent clusters with 109 origin-destination routes. On these routes, as many as 151 passenger trains are expected to be operated by private players.
The rights of private investors will include pricing, service, and operational flexibility. Also, the investor will have the right to choose halts, freedom to procure rolling stock. Investors can bid for as many clusters as they may choose. The obligations and payments of the investors include fixed haulage charges, indexed annually; energy charges as per actuals and % share in gross revenue.
The award will be done through two-stage bidding process. The first stage involves RFQ for pre-qualification based on financial capacity (50% of the estimated cost of the project) and the second stage involves RFP- financial bidding.