Industrials

Will The Private Trains Derail?

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<p><img src="https://kradminasset.s3.ap-south-1.amazonaws.com/ExpertViews/sudhanshu.jpg" alt="" width="750" height="169" /></p><p>Early last year, Indian Railways (IR) announced an ambitious plan to privatize 109 OD (Origin-Destination) pair of trains forming roughly 5% of existing Mail/Express trains over 12 clusters. The avowed objectives declared by the Ministry of Railways (MoR) were,</p><ul><li>Induction of modern technology &ndash; Quantum Jump</li><li>Reduced maintenance intervention - 40,000 km/30 days</li><li>Reduced transit time</li><li>Enhanced safety</li><li>World class travel experience to passengers</li><li>Reduce demand supply deficit in the passenger transport sector</li><li>And, bringing in private investment to the tune of Rs 30,000 crore in rail sector</li></ul><p>The bidding process was started in July 2020. The model proposed a concession period of 35 years with the concessionaire (termed PTO or Passenger Train Operator). A PTO would be required to induct their own train, pay fixed haulage charges for path, stations, access to railway infrastructure and charges for electricity consumed and share revenue with IR to be decided by competitive bidding. The conditions would be stringent &nbsp;with the PTO contracted to ensure 95% punctuality and not more than one failure per lakh kilometre of travel and commitment to improved on-board services like cleanliness and catering. The trains brought in by a PTO would require to clear tests and trials to validate rolling stock operation by IR before introduction. IR would provide Driver and Guard and use of all its fixed infrastructure except maintenance for which the facilities would require to be created by PTOs.</p><p>The model looked good on paper with IR standing to gain in terms more revenues without investments, PTOs to make reasonable profits and passengers to get better travel experience.</p><p>The exercise has since been going through chops and changes. Bids against RFP have been called and the last date of submission is likely to be extended to the middle of the year. There, however, remain clear gaps between what the prospective PTOs wish to be changed in the bid documents and what IR is willing to concede. Some of these important issues are:</p><ul><li>The issue of absence of an independent regulator</li><li>A PPP contract of this nature being tried out for the first time, should not be unyieldingly spread over 35 years; a 24-year contract is more reasonable.</li><li>Freedom to the PTO to choose his train&rsquo;s departure or arrival time as well the origin and destination within a city based on his estimation of preferences of the passengers. Retention of exclusivity to a PTO till the occupancy reaches 95%; instead of penalizing a PTO for good performance, they should be incentivized.</li><li>PTOs should be given some flexibility to choose the routes of operation within a band of 70 to 100% of the prescribed routes in a cluster.</li><li>The exit clauses and penalties should be tweaked as no PTO would like to exit after investing in rolling stock, the investment which cannot be salvaged easily in an exit situation.</li></ul><p>Assuming that the entire exercise by Indian Railways (IR) was not about, first boiling the ocean and then blamestorming, but hopefully more like doing nothing by halves, one hopes that better sense would prevail and IR would address the genuine concerns of the bidders. It is a good initiative for the country and should not be allowed to derail due to cussed <strong>babudom</strong> of IR.</p>
KR Expert - Sudhanshu Mani