Private trains to begin plying by 2023, will have competitive pricing: Railways
The Railway ministry on Wednesday began the formal process to allow a private company to run trains on 109 routes -- a process that aims to, for the first time, open up one of the government’s most prominent enterprises that has in recent decades been outpaced by the demands of a rapidly growing economy.Updated: Jul 02, 2020 20:18 IST
The operation of private trains along 109 routes is scheduled to begin by 2023, Chairman Railway Board VK Yadav said on Thursday adding that the fares will be decided by the private players based on competitive pricing.
Fares will be based on competition with other modes of transport in the same segment, including airfares and fares of air-conditioned buses, he said.
“We need to note that this is the era of competition, IRCTC had also run a few private trains. The fares that private train operators decide will weigh in factors including airfares that come in the same segment and also AC bus fares and we will fix the fares after comparing with them. I do not think that the fares fixed by private train operators will be too high ultimately if they want to keep financial viability,” Yadav said at a virtual press interaction on Thursday.
Railways is currently operating in losses in the passenger segment, Yadav said and it aims to meet its expenditure through a minimum guaranteed cost that the private train operator will have to pay to the national carrier.
“Bids have been designed in such a way that Railways will be able to recover cost i.e. the minimum guaranteed cost that the private train operator will have to pay to us….Right now we are making a loss in the passenger segment operation and basically we cross subsidise with the freight segment. In this particular project, what we have devised is that railways is not going to lose anything and ultimately the minimum cost which the private operator is going to pay will be able to meet the expenditure of the Railways and whatever revenue we get over and above will be profit for the Railways,” he said.
The Railway ministry on Wednesday began the formal process to allow a private company to run trains on 109 routes -- a process that aims to, for the first time, open up one of the government’s most prominent enterprises that has in recent decades been outpaced by the demands of a rapidly growing economy.
The ministry issued what is known as a request for qualification (RFQ) for a private company to run 151 trains spread over these routes, laying down specific conditions that will need to be met in a move that is meant to “introduce modern technologies and world class services” for one of India’s most popular modes of transport.
“Our target is that the first set of trains will start running by April 2023, and the bidding process which we have initiated the timeline is such that we should be able to open the tender sometime in February-March and finalize sometime in April and then we will then invite the Request For Proposal,” he said.
The bidding and procurement of trains and coaches will be done under the government’s ‘Make in India’ policy.
“Train sets have to be bought by private operators and maintained by them. We are expecting that the private train operations will begin by April 2023. All the train sets and coaches will be procured under this project and will be at par with the Make in India policy…We have had a few meetings with the stake holders and will hold a pre-bid conference also after 15-20 days,” he said.
The ministry said the planned investment will come to around Rs 30,000 crore, the rakes will need to be manufactured in India, and the private entity shall be responsible for financing, procuring, operation and maintenance of the trains.
On whether Chinese firms will be allowed to bid, Yadav said, “As far as the question on Chinese companies arises, there are guidelines under the Make in India Policy by the Department for Promotion of Industry and Internal Trade (DPIIT) and we will follow them.”
Hindustan Times reported in September that the national carrier is considering the idea of handing over operations of more trains to private players on several important routes with improved services and amenities for passengers.
Yadav said the ongoing situation of Covid-19 and restrictive measures in place to avoid the spread of coronavirus will impact the Railways’ privatisation plan.
“As far as the ongoing Covid-19 situation is concerned, yes there is an issue, it’s a global pandemic and that is the reason we delayed our RFQ for some time but now we have realised that economic activities are gradually opening up and that is why we decided we should go for the bids. Since we are expecting the first trains to run in April 2023, we have enough time and our estimation is that by that time the Covid-19 situation will stabilize,” he said.
Opposition leaders on Thursday criticised the move. Congress MP Rahul Gandhi on Thursday said the government has snatched the lifeline of the poor. “Rail is the only lifeline of the poor and the government is taking it away from them,” he tweeted.
Yadav said that the fares of 95% trains that will be operated by the national carrier will be fixed by the Railways and the fares will not be increased. “The poor will get a huge advantage with this, on the same price they will get better facilities as technology and safety will improve,” he added.