Tender on Privatising 150 Trains Likely After Winter Session

New Delhi: Fearing backlash over the move to privatise train operations in Indian Railways during the upcoming session in Parliament, the government is now planning float the tender inviting prospective players after the winter session gets over in December.

Showing urgency, the government recently constituted a special task force comprising a group of secretaries to expedite the initiative on private train operation and station redevelopment projects last month. However, the first meeting of the group is yet to take place.

According to Railways insiders, though the request for quotation (RFQ) for the Rs 22,500 crore project, defining the eligibility criteria for inviting private players for running 150 trains is almost ready, it is unlikely to be floated now.

Facing widespread protests from unions, the government does not seem to be in favour of inviting the wrath of the Opposition during the winter session by floating the tender.

The winter session of Parliament is beginning on November 18 and is scheduled to continue till December 13. It is expected to take up a number of Bills. Two crucial ordinances are also on the list to be converted into law during the winter session.

One ordinance relates to reducing the corporate tax rate for new and domestic manufacturing companies to arrest the slowdown in the economy and boost growth. It was issued in September to give effect to amendments in the Income Tax Act, 1961 and Finance Act, 2019.

The second ordinance, also issued in September, relate to the banning of sale, manufacture and storage of e-cigarettes and similar products.

On the rail sector, the Narendra Modi government is keen to involve private players in train operation, opening the doorway for the systematic collapse of the last vestige of government monopolies.

According to the proposed RFQ, the bidder must have minimum five years’ experience in transportation or related field and Rs 1,800 crore turnover.

The private player interested to run the train should also have Rs 450 crore positive net worth and has to bid for minimum 12 trains and a maximum of 50, according to sources.

The global tender envisages the train operator to have minimum Rs 200 crore as leasing working capital.

The RFQ has provision for a global player to bid directly or form joint venture with Indian company to enter the race.

The move has generated keen interest in the industry besides a few airlines have also shown interest in entering the race.

Meanwhile, the Railways is keen to make its first corporate train -- Tejas Express -- a pilot project for private train operation, to be a commercial success, as it is likely to attract private players on other routes.

The Delhi-Lucknow Tejas Express, the first corporate train in the country, launched by the Railways subsidiary on October 4, is reportedly doing brisk business, encashing the festival season crowd.

With dynamic fares and growing demand, the number of coaches in Tejas have been increased to 15 from 12. The ticket rate is being kept at 20-30% higher than Shatabdi and less than the airfare.

The occupancy rate in Tejas varies between 50-70% on an average, barring a few occasions when the train had a high of 90% occupancy and a low of 30% occupancy, sources said, adding Tejas can achieve break-even with 70% occupancy.

IRCTC pays about Rs 13 lakh as haulage charge daily and seems to be comfortable with earning Rs 17 lakh.  However, some days its earning has dipped to less than the haulage charge, while at times it has exceeded Rs 16 lakh.  

The Railway subsidiary, however, is hopeful that the second Tejas would be earning more than the first one as the buying capacity on the Mumbai-Ahmedabad route is considered robust.

Arun Kumar Das is a senior Delhi-based journalist.