Private train operators will pay hefty fines for under-reporting revenues

Mamuni Das | | Updated on: Jan 17, 2020

Government can depute officials at private operators’ offices to track possible under-reporting of traffic, says Railways’ draft agreement

If found misreporting revenues, private train operators will be slapped with hefty penalties of 180 times the extent of the gap established on the average daily revenue, says the draft agreement floated for running private trains on the Indian Railways (IR) network. This is because IR will allow private operators to run trains on high-demand routes on the basis of a higher share of the revenue being offered to itself.

The government plans to run 150 private passenger trains on 100 routes, for which it has put out the draft contract agreement and invited comments. The routes selected are those on which trains typically have long ticket wait-lists.

Effectively, the demand for reserved seats or berths on these trains has been more than IR could supply. The routes have been bunched into seven clusters and each operator who offers the maximum revenue share will win the right to run trains on those routes for 35 years.

Cost and revenue

The operator has to invest in buying trains and pay haulage charges to IR for using the stations, tracks and signalling, and for fuel costs. The haulage charges will be linked to the Wholesale Price Index and revised periodically.

On the revenue side, the private operator is allowed to fix market-linked fares on those routes. “Apart from revenue from selling tickets, the train operator can also make money from advertising and selling content, among others,” an IR official told BusinessLine .

Per the draft contract, the government can depute its officials at the private company’s offices to track possible “under-reporting of traffic” by the private train operator. If the average daily revenue as reported by the operator in the preceding month is 1 per cent more, the operator will have to pay a penalty of 180 times the difference to the government.

The train operator has to invest in 12 rakes or sets of trains, with each train comprising at least 16 coaches for each route.

To prevent IR from operating competing trains, the private operators have been promised that it will not run trains before and after 15 minutes of a private train’s scheduled departure. However, the exclusive right window is valid for only three years, according to the draft contract. After that, IR can invite bids to run more trains, in which the operator can also participate.

The discussion paper noted that IR has huge unmet demand — with almost 88.5 million wait-listed passengers in fiscal 2018. This is IR’s first major attempt to get private investment in running passenger trains, with an aim to wean traffic from airlines. If the operator gets revenues by selling carbon credits under the UN’s climate change mechanism, then the operator has to share half of the revenue with itself, IR has said.

IR has tried getting private partners to run tourist trains. Most recently, it permitted IRCTC, a public sector unit, to run Tejas Express trains between Delhi and Lucknow. IRCTC is seeing a capacity utilisation of about 70 per cent, say sources. The second Tejas Express of IRCTC between Delhi and Ahmedabad was flagged off on Friday.

Published on January 17, 2020
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