The Finance Ministry came down heavily on the Indian Railways today for the inordinate delay it has shown in awarding public private partnership (PPP) projects.

Mr R Gopalan, Secretary, Department of Economic Affairs (DEA), indicated that the Railways have not been proactive to take their proposed PPP projects forward.

Citing the example of Shipping Ministry, Mr Gopalan said that the Ministry adopted the model concession agreement (MCA) made for road projects as a base, made the requisite changes and got the contract approved from the Cabinet.

“Nothing prevents the Railways from doing the same,” he said, when an Indian Railway official said that no MCA has been designed specifically for factories proposed to be put up by the Railways.

These discussions were part of a round table organised by FICCI on PPP policy for infrastructure sector.

The Railways have been planning to set up locomotive and coach factories through joint ventures with private sector for over three years now.

The diesel and electric locomotive factories are proposed to be set up in Marhowra and Madhepura. The Railway Ministry has been maintaining for at least two years now that it will invite the financial bids “very soon”.

Mr Pratyush Kumar, President and CEO, GE Infrastructure India, pointed out the need to ensure continuity of people who manage the project.

“People who are supposed to get it forward (tend to) change….The new set of people framing the policy feel a lot has been given out (to the private sector),” Mr Kumar said.

Questions are raised on the earlier decisions both within the Ministry and across the Ministries.

Mr Rakesh Srivastava, Joint Secretary-Ports, Ministry of Shipping, pointed out that the finalisation of the MCA document – which is used to award the PPP contracts – took two years for the Shipping Ministry.

Dismal performance

The Railways performance in terms of PPP projects awards has been dismal. Between 1998-2009, only four projects were awarded on PPP basis by Indian Railways, against 43 projects in the port sector, and 271 projects were awarded in the road sector.

In value terms, 45 per cent of total value projects are in the road sector, while 30 per cent of total value of projects are in the port sector, and 1 per cent of the total value of projects are from the Railways sector.

Mr Param Sivalingam, CEO-EPC Division, GMR Infrastructure Ltd, said that the Government has to be clear about its intent on why it is implementing projects on a PPP basis. “Is it to get the best value for the consumer; or is it a revenue raising objective for the Government,” he asked.

Current PPP frameworks are plagued by lack of implementation, so any Government policy that seeks to boost private investments into infrastructure has to focus on time-bound execution, said Mr Abhaya Agarwal, Executive Director and Leader – PPP, Ernst & Young, said.

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