Bangladesh’s political turmoil and other geo-political issues in the neighborhood, particularly in South East Asia, have slowed down at least three overseas projects undertaken by Railway PSUs, that include RVNL and IRCON International.
Projects in Maldives and Myanmar have also been hit, while North East connectivity plans through Bangladesh and upcoming rail (coach) tenders there have either slowed down or put-on-hold, officials aware said.
Bangladesh projects
For starters the ongoing turmoil in India’s eastern neighbour has impacted the North East connectivity plans – most of which goes through Bangladesh.
Earlier this year (around June), the Final Location Survey (FLS) was sanctioned by the Railway Board for around 1275.50 km, covering 14 railway connectivity routes through Bangladesh, Nepal and other alternative ones ‘towards’ North-East.
Of the survey ordered, new lines connecting Bangladesh will be around 500 km, while gauge conversion will be around 367 km. In Nepal, over 200 km of new lines will be laid; while in the North East there will be another 212 km of lines being laid.
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“There has been some slowdown in these plans at the moment.... may be for the next few months until political stability comes in the area,”a Railway official told businessline.
Plans for participating in Railways tenders in Bangladesh have also been hit. According to RVNL officials, the company was expecting to participate in tenders worth of ₹2500 crore – mostly LOC (line of credit) and government grant projects; but that too is unlikely in the immediate short term.
“....Bangladesh....We had a plan for participating in tenders worth ₹2500 crore. These were LoC projects and government grant projects. But because of the geo-political reasons the tenders may not be coming up in the next few months time,” Rajesh Prasad, Director (Operations), RVNL said during a recent post-results analyst call.
Maldives project
In Maldives, there has been a near ₹300 crore revenue hit for RVNL from the ongoing Harbour project there.
In 2022, the Navratna company was appointed as project implementation agency for the UTF (Uthuru Thila Falhu-Island) Harbour project in the Maldives. The order was placed by the Union Ministry of External Affairs. The project, at a cost of ₹1,544.60 crore, was to be completed within 24 months.
Prasad said, RVNL had awarded all the sub-contracts, mobilised resources and manpower. But because of geo-political “situation in Maldives”, it has “slowed down”. This incidentally was the first overseas project for the company.
“...And it has slowed down like anything. We had a plan of turnover of around ₹300 crore during Q1 (April – June), and we could not do even 10 per cent of that. So it was a setback,” he said.
Ircon’s ‘drawbacks’
Ircon International too confirmed that there were “drawbacks” to its overseas projects in Myanmar (apart from Bangladesh).
“There have been a couple of drawbacks that have happened in the last one year. The first one, there has been some political turmoil in two of our projects, Myanmar as well as Bangladesh...” Ragini Advani, Director (Finance), Ircon International Ltd, said during a recent investor call.
“There have been certain decline in the international revenue as well and that is mainly because of the problems that we’ve seen in countries like Bangladesh,” she further said.
Beyond geo-political reasons, funding from Government of India -given to the projects by MEA, either in the form of grant or an LoC - “is right now under wait-and-watch”.
“So it’s (funds) been given very slowly by the government,” Advani said adding the company is “also awaiting further details” from the Centre.
According to her, many of the projects that Ircon does, “require funding from India”. “So that will depend on how MEA is planning to take it forward,” she said.
Domestic to international order-book position for Ircon is around 91:9.