Private companies to lay tracks for Indian Railways

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In move that signals the entry of private participation into its predominantly government-controlled operations, Indian Railways has finalised plans to rope in private firms to build 358 kilometers of tracks on three stretches at an estimated cost of Rs 3,016 crore.

The stretches include: the 202km Kazipet-Ballarshah line (Rs 1,566 crore); the 80km Bhadrak-Nargundi line (Rs 900 crore) and the 76km Wardha-Nagpur line (Rs 550 crore). So far, track construction has remained the preserve of the public sector.

“Request for Qualification (RFQ) inviting private participation for one project has been floated, while bids for two others will be launched this year,” officials said. The Railways has a list of approximately 380 pending projects with a financial burden of approximately ` 5 lakh crore. “Engaging the private sector to complete these projects appears the only viable option,” a senior official said.

These “annuity” projects will be awarded under the engineering procurement contract (EPC) mode. This means that the chosen firm/firms will get a “bulk contract” and will be held responsible for all activities relating to project execution. Earlier, the Railways had been following a system of “item-based contracts”, with different directorates and departments floating separate tenders for one single project.

Construction cost will be borne by the private company, which will get an annual premium from the Railways. “Independent consultants will be appointed to adjudicate possible disputes that might arise,” officials said. Once constructed, the Railways will operate and maintain the lines, and pocket the revenues.

Source: Hindustan Times

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