indian railways privatisation

Modi Expected to Flag off IRCTC’s Third Train in Varanasi This Week

The move is widely seen as a precursor to full-fledged private rail operations, whose bidding process will start in a month.

New Delhi: Buoyed by the successful run of two trains on a special fare structure, Indian Railway Catering and Tourism Corporation (IRCTC) will be operating a third train from next week between Indore and Varanasi.

Sources say that Prime Minister Narendra Modi is likely to flag off the Humsafar service, named as ‘Kashi Mahakal Express’, with state-of-the-art facilities on February 16 from Varanasi with much fanfare. The overnight train will cater to the increased demand of the passengers connecting Lucknow, Kanpur, Bina, Bhopal and Ujjain along the busy routes.

IRCTC, a railways PSU, is currently operating two Tejas service between New Delhi-Lucknow and Mumbai-Ahmedabad. On these trains, passengers have to pay 20% to 30% more than the regular service as the fare is determined through dynamic fare system.

Though IRCTC-run trains cannot strictly be described as a privately-operated train, since the PSU is under the administrative control of the Indian Railways, it is widely perceived as a pilot run before 150 trains are allowed to be run by players from the private sector.

While IRCTC decides the fare structure and is responsible for providing on-board amenities – including catering, the safety. Security entailing the signaling system, loco drivers, platform and stations are with the Railways.

According to the mutually agreed arrangement, IRCTC will pay about Rs 1000 per km as haulage charge to the Railways for availing the railway system, including trains and infrastructure.

Started last month, the Mumbai Tejas Express is running with full occupancy and the revenue collection is ranging between Rs 11.1 lakh and Rs 11.5 lakh per day.

Also Read: As Buzz Builds Around IRCTC’s Tejas Express, Will Privatisation Take Wing?

However, the Lucknow Tejas launched in October last year, is currently having about 80% occupancy. The revenue earning ranges between Rs 9 and Rs 10 lakh a day.

While the Tejas service is equipped with all AC Executive and Chair Car seating arrangement and meant for a day-long journey, Humsafar is for overnight travel with a full three-tier AC service. The Kashi-Mahakal Express will have 15 AC coaches, a modular pantry and two power cars.

According to sources, since the revenue collection based on the dynamic fare system for the Tejas Express is fairly okay, the Railways decided to give another train to the IRCTC to run between Indore and Varanasi.

Prime Minister Narendra Modi speaking in Dumka, Jharkhand on Sunday. Photo: PTI

Tender to be called for private players soon

Meanwhile, going ahead with the process of handing over 150 trains to private players, the Railways will float the tender inviting the probable bidders to participate in the race shortly.

The tender document is being finalised and it would be floated by the month-end, said a senior railway ministry official.

The Rs 22,500 crore private train operation project entails operation of 150 trains on 100 routes across the country. Trains connecting all major destinations like Mumbai, Pune, Ahmedabad, Kolkata, Chennai, Bangalore, Patna, Ranchi, Bhopal, Varanasi and Lucknow are on the offer.

Private players are expected to introduce modern trains with 16 coaches, each equipped with upgraded facilities which include better interiors, comfortable seats, onboard entertainment, modular clean bio-vacuum toilets, good food served in an overall better hygienic condition.

There are many global players from France, the US, Spain, Japan, South Korea and China who have evinced keen interest to run trains in the country. Major rolling stock companies such as Talgo, Alstom, Bombardier, Siemens, Hyundai, Macquarie, Hitachi and CRRC have also shown interest, while top domestic giants like Tata and Adani are also expected to enter the race.

Also Read: Faced With Mounting Losses, Indian Railways Starts New Year With a Fare Hike

Among the Indian companies, Tata Realty and Infrastructure, Medha, Bharat Forge, BEML, IRCTC, RK Associates, Gatx, Essel Group, Adani Ports and SEZ were present in the stakeholders meet and are expected to be in the race to run private trains in the country.

Facing a loss of over Rs 40,000 crore in the passenger business, the Railways has recently hiked the fare from January 1, 2020. While there is no increase in fares of suburban services, in the case of non-suburban services, a nominal increase of one paisa per km has been done. In the case of non-AC and AC classes in Mail and Express trains, the fare has been increased by two paise per km and 4 paise per km respectively.

Though the Railways aims to mop up Rs 2,300 crore in a year from the recent fare hike, the passenger business is facing a huge loss. Since freight businesses earn profits, the passenger service is cross-subsidised from it.

Arun Kumar Das can be contacted at akdas2005@gmail.com.

As Buzz Builds Around IRCTC’s Tejas Express, Will Privatisation Take Wing?

The national transporter is in the process of finalising bidding documents for inviting private players to run about 150 trains.

New Delhi: Buoyed by the successful run of the first ‘corporate’ train between Delhi and Lucknow, the Indian Railways has received strong interest from the private sector even as various unions continue to oppose the plan.

According to sources in the national transporter, at least three Indian airlines have also expressed initial interest in bidding and operating certain train routes as a possible last-mile connectivity solution that they can offer their customers.

Much of this excitement is due to the initial demand that the IRCTC-operated Tejas Express has been attracting. The next Tejas service, which will run between Mumbai and Ahmedabad, is currently getting ready.

Reeling under mounting losses, the Indian Railways has firmed up plans to offer about 50 high demand routes for private train operations, in a move that will involve roughly 150 trains.

The Railways wants to lease out to private operators a number of long distance or overnight journey trains. These include routes such as Delhi-Mumbai, Delhi-Lucknow, Delhi-Jammu/Katra, Delhi-Howrah, Secunderabad-Delhi, Delhi-Chennai, Mumbai-Chennai, Howrah-Chennai and Howrah-Mumbai.

It has also proposed to invite private players for the intercity express on over 12 routes including the Mumbai-Ahmedabad and Mumbai-Pune journeys. Besides this, there are also proposals to operate suburban trains in Mumbai, Kolkata, Chennai and Secunderabad by private players.

Currently, the national transporter is in the process of finalising bidding documents to invite private players to run about 150 trains. The cost of these 150 trains is estimated to be Rs 22,500 crore as one rake will consist of 16 coaches.

Also Read: Large Rail PSUs to Hit the Public Markets to Meet Highest-Ever Divestment Target

It will be decided through competitive bidding and for this, the tender document is being finalised taking various factors into account, sources told The Wire. The process envisages prospective operators bidding for a minimum of 12 trains and a maximum of 50 trains, which include overnight and day-long trains.

Asked about airlines’ interest in train operation, sources told that some airlines are exploring acquiring certain train routes as a last-mile connectivity solution to increase the demand for their air routes. There is also a possibility that some players may discontinue their non-profitable air routes and focus on train routes instead.

In countries abroad, some airlines have chosen to do this, although its unclear whether the precarious financial health of the aviation sector in India will permit such an endeavour.

“Currently nothing is concrete. Once the tender is floated, the picture will be clear and we will come to know who all are coming,” sources added.

When asked, Indian Railways spokesman K. Shyama Prasad said that the ministry had no information on this and that there would be more meetings before anything is finalised. n it.

According to the potential tender conditions though, private operators will be given freedom to either purchase new trains or acquire it from the Railways on lease. Since this is the first time in the country that the public transporter is allowing private train operators to run passenger services, the government is approaching the final process with caution.

While private players are keen to import customised trains and are seeking dedicated routes to ensure punctuality, the Railways has to take a final call on the issue.

However, the national transporter will still be in control on the safety front, giving away only pricing decision to private train operators.

While the signalling system, loco pilots and platform will remain with the Railways, catering, onboard housekeeping, ticket pricing and checking, infotainment and other amenities will be the train operator’s responsibility.

IRCTC, the Railways subsidiary, which was being divested of 12.5% of its shares through an IPO, will pay nearly Rs 13 lakh per day in haulage and lease charges and is expected to generate about Rs 16 lakh to 17 lakh per day in revenue from the Delhi-Lucknow Tejas Express.

Arun Kumar Das is a senior journalist and can be contacted at akdas2005@gmail.com

Large Rail PSUs to Hit the Public Markets to Meet Highest-Ever Divestment Target

The Indian Railways has unleashed a series of IPOs to mop up about Rs 1,500 crore in the current fiscal.

New Delhi: Reeling under limited fiscal space amid an economic slowdown, the Narendra Modi government is opening up greater private investment with a steady stream of public sector units (PSUs) stepping up their disinvestment drive.

The Indian Railways has unleashed a series of IPOs to mop up about Rs 1,500 crore to begin with in the current fiscal.

While the IRCTC, the railways’ ticketing and catering arm, would open up its Rs 650 crore initial public offer (IPO) on Monday, two more railways PSUs are gearing up to follow suit in quick succession.

RailTel and IRFC, the telecom infrastructure provider and financial service arm of the Railways respectively, would list their shares on the market shortly as part of the broader quest to achieve an all-time high disinvestment target of Rs 1.05 lakh crore.

Divestment revenue, crucial for bridging the fiscal deficit gap, is in focus as the government has prepared a list of about 43 PSUs to be divested in phases.

Also Read: Railways Hopes to Get Passengers to Pay up to 71% More for Train Tickets

The 12.5% divestment of IRCTC is expected to elicit a good response as it has a unique business model, and, more importantly, the company does not have any competition across any business segment.

The Indian Railway Finance Corporation (IRFC), the dedicated financing arm of the Indian Railways for mobilising funds from domestic as well as overseas capital markets would go for 5% divestment.

RailTel, which is providing Wi-Fi at all major stations across the country, has achieved a turnover of Rs 1,017 crore and posted a profit before tax amounting to Rs 179 crore and net profit of Rs 110 crore during 2018-19 on a standalone basis.

According to sources, RailTel will offload about a 10% government stake through its IPO shortly.

Most PSUs to go for divestement

Barring a few, all rail PSUs will go for divestment as per the decision. Railways PSUs such as Konkan Railway, Mumbai Railway Vikas Corporation (MRVC) Dedicated Freight Corridor (DFC) and Braithwaite & Company Limited (BCL), however, are not being considered for disinvestment.

Railways blue-chip companies such as IRCON, RITES and RVNL are in for offloading about 13% of their shares by the year-end or early next year.

Like Air India, the rail PSU Concor is slated to be on strategic disinvestment where railways will have to offload its major share.

Though the decision to divest PSUs was taken in 2010, it has got the traction recently with the concerned ministries, including railways, stepping up the drive to meet the goal.

Besides divestment, the Railways is also pushing for the privatisation of its passenger service amid a whopping loss of over Rs 40,000 crore in the segment.

While the IRCTC has been nominated to run two private trains on Delhi-Lucknow and Mumbai-Ahmedabad routes, there are about 50 routes up for grab across the country including Delhi-Mumbai, Delhi-Kolkata, Delhi-Patna and Chennai-Mumbai.

The Railways will lease out the paths to private players while the signalling and platform will remain with the public behemoth.

Arun Kumar Das can be contacted at akdas2005@gmail.com