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Wednesday, December 02, 2020

Private train operators must deposit security with Railways

Sources said NITI Aayog officials felt private firms—which are anyway bringing in investment and taking up associated risks—need not provide a security deposit, so as to ensure the ease of doing business.

Written by Avishek G Dastidar | New Delhi | October 31, 2020 2:34:43 am
The estimated security deposit would come to around Rs 1,000 crore. (Express photo)

Private firms that run passenger trains must deposit a security amount equal to 3 per cent of the project cost with the Railways. And, to ensure safe operations of private trains, Railways officials will carry out the same pre-departure inspections as the ones for government-run trains.

Both decisions were taken Thursday at a meeting of the government’s Public Private Partnership Appraisal Committee (PPPAC) with NITI Aayog and Railways officials to iron out multiple wrinkles before the expected operations of 151 private trains on 113 routes in in the country.

Sources said NITI Aayog officials felt private firms—which are anyway bringing in investment and taking up associated risks—need not provide a security deposit, so as to ensure the ease of doing business. Also, they felt, there was already the provision of an escrow account where the proceeds of the business would go.

These companies are expected to invest up to Rs 30,000 crore for the 12 clusters where the private operations will be permitted. The estimated security deposit, therefore, would come to around Rs 1,000 crore.

It was also felt during the meeting that if a company is unable to meet its financial obligations or provide the services, the government should have some financial leverage to work with. The PPPAC, sources said, therefore favoured the retaining of the security deposit rider.

The other issue, of whether Railways officials needed to carry out additional safety inspections, was not flagged as a pain point by any of the companies. It was internally pointed out that the clause could be done away with as private operators were supposed to certify a train as safe on their own.

The Rail Ministry is currently processing the “Requests for Qualification” for private routes. Larsen & Toubro, GMR and BHEL are among the 15 firms that have submitted 120 bids for the 12 clusters. Sources said around 10 bids have been found to be ineligible on various grounds in the ongoing evaluation exercise.

It was also pointed out in the meeting that the haulage charge of Rs 512 per km payable to the Railways by the private companies was cheaper by around Rs 300 when compared to the haulage charge IRCTC pays for its two corporate Tejas trains. The reason is that in the case of Tejas, the trains belong to Railways and the lease for the rakes are also included in the haulage charge. When it comes to private firms, however, the rolling stock belongs to them, and on top of haulage, there will be revenue sharing with Railways as well—so, the exchequer will not face a financial disadvantage.

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