Railways board, minister differ on key PSU issue
The board, consisting of its chairman and members, meets every week to decide on important matters. The minister is not a part of this meeting.Updated: Jun 16, 2019 23:37 IST
Railways minister Piyush Goyal has been a great supporter of the tender process in granting contracts to public sector units for transparency and cost-effectiveness. But documents accessed by HT show the Railway Board thinks otherwise.
The board met on May 9 and decided in favour of the nomination process. The board, consisting of its chairman and members, meets every week to decide on important matters. The minister is not a part of this meeting.
The Railway Board chairman is equivalent to the secretary in the ministry, and decisions related to the railways are taken in the board meeting. Crucial matters are then referred to the minister.
“Keeping in view the capacity limitations of Railways’ construction organisation, the role of PSUs in expeditious completion of projects shall continue to be important...The system of assigning works to PSUs on consolidated management fee, based on types of work, need to continue,” read the meeting minutes, which HT has accessed.
This seems to be contradicting the stand taken by their minister and the General Finance Rules (GFR), which was cleared by the Union cabinet in 2017 outlining how a project should be awarded.
In November 2018, Goyal asked the railway board to follow the mandatory competitive bidding process while allocating work to PSUs. The 2017 GFR made it mandatory to have limited tender to arrive at the right costing, even if the work was to be awarded to PSUs.
The Indian Railway has given projects worth R4,000 crore related to signalling and electrification to its PSUs on nomination basis in the last one year. IRCON, RITES and RVNL are PSUs that execute works such as railway line expansion and railway station construction.
For tender, various parties are requested to quote a price to complete the project and usually the lowest one gets the mandate to execute the project. In nomination, the authority just nominates a PSU to execute a project on its behalf without arriving at the cost factor.
“Once you issue a tender, the exact cost of the project is known and different party’s quotes different amount and it is easier to estimate the cost of the entire project. In nomination process, the PSU will quote the price and start the work. It might take less time but is not transparent and cost more to exchequer,” said a senior railway official.
Another official told HT, “Not even PSUs can be given contracts on nomination basis. They need to bid. That is the reason why IRCON stopped constructing Road Over Bridges.’’
Shri Prakash, a former member of railway board, said, “For better quality, railway should go for tender in open market but then railway will have to do the supervisory work, which in case of nomination, is the job of PSU.”
Queries from HT to the railway spokesperson remained unanswered.
First Published: Jun 16, 2019 23:37 IST