How railways gained from tender bender under Suresh Prabhu

Transparency and swifter project approvals have pushed Indian Railways' big-ticket projects into the high-speed lane with significant returns to investors.

Union minister Suresh Prabhakar Prabhu credits his team for initiating this turnaround of the world's fourth-largest rail network, which was creaking from decades of neglect and chronic under-investment.

Most of the change has been made possible by ushering in clarity and doing away with the "cumbersome" railway tendering process that discouraged big contractors because of the slow returns and inherent favouritism, he says.

"It's the will to generate money and be transparent and proactive in time-bound delivery, which attracts investors, both in India and abroad," Prabhu told Mail Today in an exclusive interview on Thursday.

Contract System

Lauded as the biggest reform in the railways, the new contract system has expedited the execution of projects apart from clearing the backlog of pending ventures.

The minister said the railways will optimise the use of information technology in the contract system that will not only add transparency but also bring greater accountability. Bullet trains may become a possibility 2023, he added.

"The tender processing time has been reduced from two-three years to nearly six months. This will accelerate the execution of projects," he said. The tardy process had resulted in a backlog of around 300 projects, costing around Rs 5 lakh crore over the years.

Such is the mood now that even big Indian companies like the Tatas, Reliance, Jindals, Adanis and L&T are not shying away from lapping up key projects to make real Prime Minister Narendra Modi's flagship "Make in India" mission, say sources. Even cash-rich PSUs, such as Coal India and NTPC, are tying up with the railways in big investment projects for mutual benefit.

The sprawling network, which is the nation's economic artery and a lifeline for its 1.25 billion people, was saturated and slow after years of underinvestment and inefficiency.

Till a year back, the railways' private investment potential was pegged at Rs 1.5 lakh crore. Today, the estimate is Rs 8.5 lakh crore for five years under the Narendra Modi government, said the minister.

Of these, investments worth Rs 2.2 lakh crore have ostensibly been pledged in the last two years for about 35 big-ticket projects to boost railway infrastructure and operations. In this, nearly Rs 33,000 crore is outside the budgeted investment and through public-private partnership.

"This is the first major step towards decentralisation where complete powers have been delegated to officers at zonal level...No tender worth even a single penny is seen by the minister," Prabhu said in his customary hurried tone. "Confidence in the railways was most urgent and that is getting back investors."

International Competition

Eight large foreign railways - Japan, France, Germany, Britain, Sweden, South Korea, China and Czechoslovakia- are going all out to compete and bid in Indian projects.

While American conglomerate GE will manufacture diesel locomotives in Marhora, French multinational Alstom will build Electric locos in Madhepura, both in Bihar. China is doing a feasibility study of a Delhi-Chennai high-speed corridor while France is examining the Delhi-Chandigarh route. Station development, "semi high speed" trains, locos, wagons, track-laying, signalling projects- foreign firms and experts are making a beeline to Rail Bhavan for everything.

For the first time, the clock of railways projects has been advanced. The network's bread-earning freight sector is heavily dependent on swift execution of the Dedicated Freight Corridor venture. The DFC, which was to start in 2023, will now kick off in 2019.

The minister made it clear that from now, tenders valuing up to Rs 500 crore, will be accepted at the level of additional members of the Railway Board. For tenders with values of more than Rs 500 crore, the additional members will form a committee for evaluation, while the concerned board member will be the tender-accepting authority.

Other states to invest

A significant development has been states coming forward to collaborate in joint ventures and special purpose vehicles for big infrastructure projects, boosting regional development, Prabhu said. As many as 16 states have joined hands with the railways and about seven have already signed pacts. Among these are Maharashtra, Kerala, Telangana, Andhra Pradesh, Karnataka, Chhattisgarh, and Odisha.

Punjab is next in line to invest with the railways for regional development and fast transportation of people and goods for business. "Cost sharing and accountability and speedy execution of projects are the advantages of the joint venture with state governments. This will create new management for specific railway projects. Projects worth Rs 79,000 crore have been taken up in joint venture with the Maharashtra government," Prabhu said.

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