Tag Archives: Rail Tariff Authority

Draft Bill for rail tariff authority soon: Prabhu

Railways Minister Suresh Prabhakar Prabhu said on Friday the ministry would soon prepare a draft Bill to setup a authority, which would frame rules for passenger fares and rates talking into account efficiency parameters.

“The framework for the regulator will be uploaded on the rail ministry’s website soon for public discussion. Once it is finalised, we hope to convert it into a law and get it passed in Parliament,” Prabhu said, addressing a gathering of investors at a Confederation of Indian Industries (CII) event on public-private partnership.

The minister had earlier this month said the railways would decide on an “independent institutional mechanism” that will decide passenger fares and freight rates based on efficiency in the system. “We will have to create a new law and seek consultation with the opposition (parties) on it,” he had said.

Prabhu, who has been facing flak for the slow progress on key projects and the lack of capital spending, also announced the Rs 82,000 crore Dedicated Freight Corridor (DFC) project would be commissioned soon. “Also, our JVs with states will bring in 2-3 lakh crore of investments and additional 70-80,000 crore investment would come from the surplus money with PSUs. These are all PPP projects,” he said.

Prabhu announced In order to boost transparency, all railway tenders will be brought on e-tendering mode by the end of this fiscal. “We have converted the previous government’s theoretical figure of $1 trillion infrastructure investments in five years a reality. Now the private sector must work along with us rather than waiting in the wings telling us what to do,” he said.

is working on a target of Rs 1 lakh crore spending in the current financial year. Of this, around Rs 60,000 crore would be sourced from the finance ministry while the rest will be sourced from internal and extra budgetary sources.

Leave a comment

Posted by on December 7, 2015 in Uncategorized


Tags: , ,

Railway Budget to announce more freight corridors

Hectic preparation has begun for 2016 rail budget, whose mantra will be to declog railways by decongesting overworked trunk routes. It will also shun populism like announcement of new trains in view of choked railway network.

“What is the use of announcing new trains (as in the past), when railways have no route capacity. We want to decongest railways first,” Railway minister Suresh Prabhu in a free-wheeling chat said indicating the rail budget in 2016 will shun populism just as this year with special emphasis to fix the chronic problem of congestion by stepping up investment. Also one need not always announce new trains only in budget. As and when capacity improves and increases, new trains would be introduced as per requirement.

For example Mughalsarai-Allahabad stretch is so overworked and it needed to be first decongested before introducing more trains on the route, Prabhu said.

Prabhu was not oblivious to the demand for more trains but for that capacity has to be created and that is the priority of the railways now. However the Railways have stepped up passenger carrying capacity during the last one year by adding more coaches to the existing trains. This has helped in stepping up passenger carrying capacity by 30-40 per cent in some routes without adding new trains particularly in sleeper classes in choked sectors.

The rail budget is also likely to announce expansion of dedicated freight corridors in the country. The railways have already started implementing Delhi-Mumbai and Ludhiana-Kolkata freight corridors. The railways are spending Rs 82,000 crore for implementing these two sections through a special purpose vehicle. JICA and World Bank are providing part of the funding and 85 per cent of the land for the two sections have already been acquired.

Prabhu said the freight corridor project completion has been advanced by a couple of years to 2017 to decongest these two high density routes. Once completed railways will be able to run goods train with a schedule and will provide more capacity to run passenger trains with higher speed on the existing lines. At present there is no time schedule for goods trains.

There are indications that at least two more dedicated freight corridors are expected to be announced in the budget. The railways has almost completed feasibility study of four more dedicated freight corridors, connecting Delhi-Chennai, Chennai-Kolkata, Chennai-Goa and Mumbai-Kolkata.

Railways would soon be announcing an independent authority, which is an improvement over the rail tariff authority that would look into passenger fares, freight and monitor efficiency. The authority would do the cost benefit analysis of various routes and fix freight and passenger fares accordingly. The significant aspect is that it will take into account efficiency in determining freight charges and passenger fares.

This body is being given final shape and will be announced soon much before the next budget. Another priority area for railways in the next budget is going to be stepping up electrification as a measure to reduce dependence on fossil fuel. This would not only help railways go green but also save on fuel cost. Despite fall in global crude oil prices, the railways still spend Rs 22,000 crore on diesel alone this year.

The railways proposed to take up 10,000 route km of electrification in the next three years, which when completed will help in saving in fuel cost of at least Rs 5000 crore annually.

India had only 380 route km of electrified railway track at the time of independence. By 2014, it had gone up to a little over 25,000 km. The NDA government proposed to add more than one third of the number in just three years. Prabhu feel electrification is a priority for railways as the rate of return on investment is one of the highest and payback time is short.

Prabhu is keen to make railways more and more green. Electrification is a step in that direction. Railways has also proposed to play a role in solar power generation by taking up projects in various stations and elsewhere. It would leapfrog in solar power generation from the present 5MW to 1000 MW in three years. It is proposed to have rooftop solar power in railway stations and already a beginning has been made in Katra station in Jammu. It has also set up a 25MW wind power generation in Rajasthan.

Railways proposed to spend Rs 8.5 lakh crore on modernisation of railways in the next five years. Though there is no dearth on availability of funds, the railways would have to adopt innovative funding as it cannot solely depend on internal resource generation through fares and freight and budgetary support.

Life Insurance Corporation would provide Rs 1.5 lakh crore funding, of which first tranche of Rs 2000 crore was secured recently. Commercialisation of railway property could be one of the innovative funding of railway modernisation. Foreign direct investment is expected to pour in modernisation of railway stations apart from major real estate developers and domestic construction companies At least 417 stations have been identified on which work is expected to start next financial year. 5-6 stations including Anand Vihar in Delhi and couple in Gujarat, the work would start this financial year itself.

Port connectivity would be another area railways would concentrate. There are already some projects have been taken up under PPP mode in Gujarat and Maharashtra and more such projects would be taken up as they are money spinner for the railways, Prabhu indicated.

Prabhu said he did not believe in announcing projects for which there is no funding. Several such projects have been announced in the past including several rail coach factories and very few have come up.

Now states were coming forward to set up railway projects in their respective states. Seventeen states have so far shown interest in signing MOUs with railways on cost sharing basis. Maharashtra, which was the latest to join the bandwagon was willing to invest up to Rs 10,000 crore, which meant at least Rs 50,000 crore more could be leveraged for such rail projects in the state.

Leave a comment

Posted by on November 10, 2015 in Uncategorized


Tags: , , , , , , ,

Indian Railways ‘mechanism’ to soon fix passenger fare rates

Indian Railways is planning to set up an independent institutional mechanism for deciding passenger fares and freight tariff based on efficiency, says Railway Minister Suresh Prabhu. He added that Railways is eyeing to save Rs 5,000 cr elsewhere.

Indian Railways “…will have an institutional mechanism which will take into account the efficiency to decide passenger fare and freight rate,” Railway Minister Suresh Prabhu said here today.

Asked whether it will be called Rail Tariff Authority, Prabhu said, “Nomenclature has not been decided yet but it will be a new mechanism altogether in Indian Railways.”

He further said that there will be a new law enacted by Parliament for the purpose.

“We will consult with Opposition on this and we will create a new law,” Suresh Prabhu said.

On energy efficiency, the Minister said Indian Railways is taking initiatives to save Rs 5,000 crore on energy bill in the next three years.

“Energy bill is the second biggest challenge for Indian Railways. We are taking various measures to reduce energy bill like going for solar power, wind energy and other energy conservation measures,” he said.

Currently, Indian Railways spend about Rs 22,000 crore on diesel and about Rs 13,000 crore on electricity.

On bullet train project, he said the JICA report on Mumbai-Ahmedabad high speed rail corridor project is being evaluated by the government to decide the future course of action on India’s first bullet train.

“The Japan International Cooperation Agency (JICA) has done a feasibility study on Mumbai-Ahmedabad high speed rail corridor. The government is evaluating it and accordingly a decision will be taken,” he said.

Besides Indian Railways, Finance Ministry, MEA and Niti Ayog are evaluating the report, he said, adding that such a project of this magnitude is happening for first time in India.

India’s maiden bullet train corridor between Mumbai and Ahmedabad will cost nearly Rs 1 lakh crore and the first train can run in 2024 if work begins in 2017, according to a final feasibility report on the project prepared by the JICA.

JICA in its report submitted to the Railway Ministy today envisages a reduction in the travel time on the 505-km long corridor between the two western cities to two hours from the existing over seven hours.

Leave a comment

Posted by on November 5, 2015 in Uncategorized


Tags: , , ,

Rail Tariff Authority likely by FY19

The Railway Ministry has announced that its tariff regulator, the Rail Tariff Authority, will be in place by FY19.

Announcing a slew of measures in a medium-term plan of action, Indian Railways said it had also shortlisted five international bidders for 15 train sets (315 railcars) for participating in its request for proposal (RFP).

Financial bids

Financial bids for the project worth ₹2,500 crore are likely by the month-end, a statement from Indian Railways said.

Train sets (electrical multiple units or local trains) are being procured to speed –up train travel on its existing infrastructure and would be used on high density routes such as Delhi- Kanpur.

Two locomotive factories at Madhepura (for electric engines) and at Marhowra (for diesel engines) in Bihar with an investment of ₹3,500 crore is likely to be done by FY19. An order book of about ₹40,000 crore is envisaged for both the plants over the next 11 years.

Of this, a major portion of equity would be funded through FDI with bids for both the factories being done successfully.

Speeding up trains

To enhance the average speed of goods trains, the Railways has targeted award of contracts worth ₹17,000 crore by March 2016 and said that implementation of the 3,300-km-long Dedicated Freight Corridor (DFC) was on track for commissioning by 2018.

Meanwhile, two loan agreements worth ₹11,375 crore has been negotiated with the World Bank for the Eastern DFC besides finalising contracts worth ₹17,500 crore in the last one year.

Indian Railways is also evaluating a bid to procure 200 locomotives (of 9,000 hp each) for ₹5,000 crore for the Western DFC besides setting up a maintenance facility at Rewari in Haryana.

Also on the anvil is design and development of 25-tonne axle load wagons which can carry a payload of 80 tonnes, enhancing freight carrying capacity by 15 per cent.

The Railways has also enhanced the carrying capacity of steel coil wagon by 68 per cent and also pressed into service six rakes to carry automobiles – each rake having a capacity to carry 318 cars.

The Railways plan to completely switch over to LHB coaches (Linke Hofman and Busch, an Alstom Company) by FY19. For this, IR has commissioned a second unit for manufacturing these coaches at ICF Chennai besides putting up a unit for producing LHB bogie frames at Budge Budge near Kolkata.

Gauge conversion

Gauge conversion of 3,200 km, new lines of 1,700 km and doubling of 8,100 km is also likely by FY19.

Connectivity to the North Eastern states has also been envisaged with Agartala, Aizawl and Imphal expected to be connected via broad gauge trains by FY19 besides the completion of Bogibeel bridge over Brahmaputra at Dibrugarh and construction of a third alternative route via New Maynaguri- Jogighopa

Leave a comment

Posted by on November 4, 2015 in Uncategorized


Tags: , , , , , ,

MRVC suggests different fares for slow, fast locals

Mounting losses, competition from Metro, Mono spark out-of-the-box thinking

A white paper to be submitted to the Railway Board also proposes the formation of a Suburban Rail Tariff Authority.

In a radical suggestion, the Mumbai Rail Vikas Corporation (MRVC) has proposed different fares for fast and slow locals in Mumbai and also an independent fare fixation committee for the suburban network.

In a white paper to be presented to the Ministry of Railways, MRVC, the nodal body for development of local rail network in Mumbai metropolitan region, has suggested that that local trains’ ticket pricing must take into account fares of competing modes of transport like BEST buses, Metro, and Mono.

Currently, the ticket prices for both fast and slow services are the same and the only price differential is between first and second-class tickets.

The same formula applies to season passes. If MRVC’s suggestion is accepted, a premium will be charged for fast trains.

The new thinking comes in the wake of the Western Railway preparing to introduce air-conditioned trains early next year. Since the fare structure of AC trains will be different, the corporation believes it also provides an opportunity to rationalise ticket prices across the suburban network. The white paper talks about how the transport landscape in Mumbai has changed with the introduction of Metro and Mono and stresses the need for local trains to keep pace.

Since a fare revision in Mumbai suburban system has always been a sensitive issue, the white paper suggests formation of an independent Suburban Rail Tariff Authority to fix ticket prices.

The white paper was ordered by Railway Minister Suresh P Prabhu with directions to cover the whole gamut of issues connected with Mumbai’s over-burdened local train network. Once the white paper is presented to the Railway Ministry, it will be put up for commuters’ suggestions.

Chapter 4 of the report, which deals with the economic status of Mumbai’s locals, states that the poor financial performance of the suburban network is a major concern and time has come for serious introspection and appropriate remedial measures.

The report states that Mumbai locals at present are the cheapest mode of public transport at 50 paise per km as compared to Metro at Rs 5 for a km, Monorail Rs 1.67 and BEST buses at Rs 4 for a km.

Mumbai suburban railway network’s losses have increased five fold in the past five years and the cumulative loss for 2014-15 stands at Rs 1400 crore.

Former chairman of Railway Board Vivek Sahai said different fares for slow and fast locals is the most practical solution to deal with the local train network’s failing financial health. “A passenger on long-distance train pays separate fare for fast and passenger trains, so why not on suburban railway? In Mumbai, time is important and local trains are the fastest mode. There could be separate colour-coded season ticket for slow and fast trains,” he said.

Transport expert Ashok Datar too agreed the differential fare structure could bail out the suburban railway system. “It is a very nice idea and we have been pushing this one for quite some time. This and many more such ideas could be tried out in the existing scenario to increase the revenue of suburban trains.”

Rajiv Singhal of the Divisional Railway Users Consultative Committee, however, said different fares for fast and slow trains will work only if the former offer something more than a quicker commute.

Mumbai suburban railway runs 2923 services daily. This includes 1618 (245 fast) services on Central Railway and 1305 (466 fast) services on Western Railway. The report adds that with every new service introduced, the operating expenses go up. In 2004-05, the cost of running a single service of a 12-car rake was Rs 52.73 lakh. In 2013-14, it went up to Rs 97.14 lakh.

Leave a comment

Posted by on August 13, 2015 in Uncategorized


Tags: , , , , ,

Govt support can’t be railways’ only investment source: Suresh Prabhu

Railway minister Suresh Prabhakar Prabhu is busy turning around the 160-year-old transport behemoth, having laid out a rather ambitious Rs 8.5-lakh crore investment road map for the next five years. The focus is on tapping all possible resources, including foreign agencies, domestic institutions and leveraging rail PSUs, the 61-year-old banker-cum-politician tells Jyoti Mukul and Sudheer Pal Singh in an interview. Edited excerpts:

How have you taken forward the investment road map rolled out in the Budget?

The white paper we brought out was a diagnosis of the financials. And one of the points that came out as a result of this diagnosis was that there is under-investment in the railways. With a Rs 8,50,000-crore Plan size for five years, we are focusing on investment to decongest our network and improve the throughput so that we can increase our earning capacity. We will leverage the books of public sector undertakings. Projects where the internal rate of return is higher than the dividend will be taken up.

Financing of railway projects cannot be left to depend entirely on internal generation. It has never happened anywhere in the world. That is why our dependence on budgetary support and extra-budgetary resources has gone up.

Revenue will increase when volume will increase which, in turn, will increase if you increase the capacity to handle more traffic. Otherwise, revenue and profit will never increase. This is the simple philosophy of any organisation. We will leverage the books of public sector undertakings. Projects where the internal rate of return is high will be taken up on priority. Multilateral agencies are willing to provide us assistance. Also, we will get money from tax-free bonds which the Finance Ministry has already announced. As of now, there is no problem of shortage of money for the railways.

Wouldn’t it lead to excessive dependence on debt?

Gross budgetary support from the government cannot be the only source for investment. Worldwide, for financing railway infrastructure, debt is taken. Currently, the debt liability of Indian Railways is just 13 per cent of the traffic receipts, which is lower than in other countries. For instance, debt was 41 per cent of the German Railways’ total revenue of 39 billion euros in 2013.

What kind of financing model will be put in place for funding projects?

We are exploring the possibility of adopting the annuity or deferred payment model for implementing projects through PSUs. SBI Caps is rendering financial advisory services to us. Of the total of Rs 8,50,000 crore, Rs 2,50,000 crore would be through market borrowing, including IRFC borrowing for rolling stock. We will use funds from Life Insurance Corporation, pension funds, etc. This does not include lending from multilateral agencies, which will come through gross budgetary support from the ministry of finance.

We have the model of leasing through IRFC and it has worked well. Seventy seven projects worth around Rs 1 lakh crore have been shortlisted which we will focus on doubling.

Your ministry has just announced the implementation of 39 Budget announcements in 36 days since April 1. But critics point out that most of these are related to relatively small and non-core issues.

All of our efforts are customer-centric. Our Budget document is a five-year plan and this plan is being unfolded by way of the Budget being passed. So, what we are trying to do is to implement each and every point I have made in my Budget speech. All of them have been turned into action points.

That is why in the first month itself we have managed to implement 39 of the Budget announcements. In addition, we have started online monitoring called E-Samiksha of all the projects.

Have you managed to bring the protesting trade unions on board on key issues, such as privatisation?

The unions, which were considered a part of the problem earlier, have become a part of the solution now. Representatives of both the trade unions came and met me today. And they have told me that the entire organisation was demoralised earlier and I have re-energised it. So, we are trying to engage with them and work with them.

What role has been envisaged for the Rail Tariff Authority?

We have started the process of setting up a working group to draw the contours of a railway regulator. The regulator’s role will be more than just tariff. It will be entrusted with making regulations, setting performance standards and determining tariffs. It will also adjudicate among licensees and private partners.

Leave a comment

Posted by on May 9, 2015 in Uncategorized


Tags: , , ,

Interview with Railway Board chairman on Railway Budget

Following the change of government, the railways is taking strides towards becoming an investor-friendly sector as it opens up to private investment and FDI. In an interview with Rajat Arora, Railway Board chairman Arunendra Kumar says investors are optimistic on the sector, and private investment could be a game-changer.

The budget talks about FDI and PPP, but you haven’t given the specifics. How much do you expect and in which areas?

FDI is yet to be cleared by the cabinet, but we want it in every area (excluding rail operations), including station redevelopment, world-class station project, warehouses, loco and coach factories and railway lines. For PPP, we are focusing on the same areas. We are giving options to private players to choose their area and then we’ll work out the modalities. Even the walls along railway stations could be built on PPP, and the investor can advertise on it.

You also said railway PSUs would be investing in infrastructure. How will this happen?

Our PSUs, such as Ircon, Rites and Concor, have cash and they can take up projects on the Built-Operate-Transfer model, or other models, such as annuity. It’s a lucrative proposition for them. And it’s not only the private sector we are expecting money from; public sector companies like SAIL and other PSUs would also want connectivity for projects.

How much money has been set aside for the dedicated freight corridor?

We’ll be awarding 1000 km on both the corridors (east and west). The project is being closely monitored and the deadlines being adhered to. We have allocated R6,000 crore for the freight corridor. The RFQ document for the 534-km Sonnagar-Dankuni corridor on the eastern corridor, to be built on PPP, will be issued in September. Land for the project is being acquired.

When will the Rail Tariff authority become operational?

By the end of this year. The members will be selected first and, after that, we’ll provide them with data and our project. The authority will start working after that. Its mandate won’t just be to decide fares, but also to find out how can the sector can grow.

How will the high-speed network be funded? when do we see it rolling?

The Chinese government did 71 studies on the high-speed corridor before it actually sanctioned the project. For such a high-cost project, we need to have more studies It can’t be based on just one or two. We have constituted two studies for the Ahmedabad-Mumbai corridor — the first one, being done by French Railways, will be concluded next month and the other one, being done by Japan International Cooperation Agency (JICA), will be completed by next year.

What are your plans for land monetisation?

One big step towards commercial exploitation of land is digitisation of GIS mapping of land assets of Railways, which the minister has announced. Resource mobilisation using land assets will be explored through private participation in setting up railway-related business on railway lands as well as for commercial development.

Financial express

Leave a comment

Posted by on July 13, 2014 in Uncategorized


Tags: , , , , , , , , , ,