Railways’ move to run private trains further delayed

Mamuni Das New Delhi | Updated on May 28, 2021

The Railway Ministry had tweaked several contract clauses to lower the risk perception of potential bidders   -  Bloomberg

Bidders sought extension citing Covid

Indian Railways’ plan to run private passenger trains has been further delayed. This time the bidders have sought extension of bidding due date for running private trains citing Covid pandemic.

Earlier, bidders had cited multiple risks in the running of trains including high haulage charges, traffic risk, competition from Indian Railways through many ways, absence of a regulator, among others. One such risk was Indian Railways running special trains with lower fare when faced with high passenger demand within the exclusive booking window time provided to the private train operator.

Financial bids are to be received by June 30, an official told BusinessLine. There have been shifts in bid due dates earlier as well starting from January 29, 2021.

Shortlisted companies

Companies shortlisted for financial bids include Cube Highways and Infrastructure, GMR Highways, IRB Infrastructure Developers, Megha Engineering & Infrastructures, Gateway Rail Freight and Gateway Distriparks; Indian Railway Catering and Tourism Corporation; and Welspun Enterprise.

The Railway Ministry had also tweaked several contract clauses to lower the risk perception of potential bidders. This included quantifying the extent of parcel cargo that could be booked in the private passenger trains – to cushion to bidders against falling revenue due to passenger traffic risks.

Explaining another potential risk and its solution, another source said, “Consider a situation when there is huge demand for some festival – say Chhat Puja or Kumbh Mela. Indian Railways may be forced to run special trains under public and political pressure. In such a case, run a train by all means….But allow the concessionnaire the right to book all passenger tickets (including those for Indian Railways) during that exclusive time window. This access to ticket pricing data will confirm to IR that it not ’under-pricing’.”

Global parallel

Lower travel demand due to pandemic is one of reasons cited by UK’s William Shappes plan where it proposes to move away from its present privatised structure. UK Department of Transport has submitted the Great British Railways report where it has proposed “the biggest change to the railways in 25 years, ending the fragmentation of running the past and bringing the network under single national leadership. A new public body, Great British Railways, will own the infrastructure, receive the fare revenue, run and plan the network and set most fares and timetables. Network Rail, the current infrastructure owner, will be absorbed into this new organisation, as will many functions from the Rail Delivery Group and Department for Transport”.

“We want our trains to run on time. This is our plan to do that, and to deliver a wider change on our railways that has never been needed more,” said the report, that was set up to review the sector after there were problems in train services and the failure of an operator. The report noted that it was dealing with something far bigger -- the almost total collapse of passenger demand initially, and a profound challenge to the sector's operating model as a consequence of the Covid-19 pandemic. “Before the pandemic…. around two thirds of passengers were using the railways for purposes that now face potentially permanent change. Much of the old demand will return. Employers and businesses know that creativity, collaboration, and deal-making are best done in person…..But commuting and business travel may never be quite the same again,” it said.

The report adds: “This government profoundly believes in the future of the railways. Without them, our cities could not function, critical freight connections would be cut off, carbon emissions and pollution would rise, and mobility would fall – not just for the millions of people without cars, but for drivers too, as the roads became clogged. We have proved our commitment: the amount we have paid to keep services going during the pandemic is now around £12 billion.”

Published on May 28, 2021

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