February 8, 2011

Rly financial position worsens: All PPP projects put on hold

Press Trust of India / New Delhi January 27, 2011, 9:42 IST

Faced with a financial crisis, Railways have put on hold all PPP projects including proposed plants at Kanchrapara in West Bengal and Madhepura and Marhora in Bihar.

Railways have to commit approximately Rs 8,000 crore per annum for these three projects - an EMU/coach factory at Kanchrapara, diesel locomotive factory at Marhora and electric locomotive plant at Madhepura - for assured purchase orders.

"In the current situation, the railways is finding it difficult to commit for the assured offtakes," sources in the Railway Ministry said and added that "due to the fund crunch, railways have put a temporary hold on these PPP projects and have set up a committee to examine how funds can be provided to PPP projects and also to its own production units."

Multinational companies mainly from the USA and Europe are involved in the bidding of these three PPP projects in Kanchrapara, Marhora and Madhepura.

"The committee comprising six senior railway officials is to examine how assured purchase contracts can be provided because railways also have their own production units. If assured offtakes are entertained then there will be very little funds left for its own units," they said.

Railways' annual purchase is estimated at Rs 15,000 cr to Rs 18,000 crore for wagons, coaches and locos.

"If Rs 8000 crore is being kept for the three PPP projects then limited funds will be left for its own production units as well as for purchase of wagons," they said.

The committee has to examine the contradictory demands on railway funds. The committee has been given 15 days time to suggest ways and means to fund PPP projects as well as its own production units.
"So till the committee's report, there is a temporary hold on all these three projects," the sources said.

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