Loss making Indian Railways to rent out hill trains to private players

The Indian Railways will soon start leasing out its standalone passenger corridors and branch lines to private companies for operations and maintenance, marking the beginning of corporate participation in the running of the world's fourth largest railroad network.

Narrow and metre-gauge tracks linking the colonial era hill stations are set to be the first of the 108,000-kilometer rail network to be run privately, a senior railway official told ET.

Largely unprofitable routes linking Kalka and Shimla, Siliguri and Darjeeling, the Nilgiri mountains with the plains, Neral and Matheran, and the Kangra Valley railways would be among the first the government will likely choose to bid out to private operators, which may include overseas companies as the existing policy on investment in railways allows 100% foreign ownership.

"We keep getting queries from private players who want to run their own operations. We want to be completely out of operations from these standalone corridors and branch lines and would only assist private players in running operations," a senior railway official said.

"All these railways are on the international tourism map and Darjeeling Himalayan railways is a Unesco world heritage site. There's a huge opportunity for private sector, and for railways also it will be profitable. "

The Indian Railways, with a 1.54-million workforce and about 6,800 stations, runs about 7,000 trains every day to ferry passengers, an activity that is generally unprofitable. In the financial year ending March 31, 2017, the losses from the passenger segment of the railroad operations are set to be about Rs 33,000 crore, about 10% higher than the losses for the previous financial year.

To minimise operating losses from a venture that also helps the government achieve part of its social objective of subsidising mass transportation, the Indian Railways is using tourism to attract private companies, particularly those from the hospitality and infrastructure industries.

"It will help us cut some flab as well as we lose a lot of money on these lines. Maintenance is also a problem since all of them are heritage lines," the official said. If the experiment meets specified benchmarks for success, these leases could be the future templates for enhanced private participation.

Winning bidders will be offered long-term concession agreements, making the leases more viable. The ministry has worked on both upfront-payment and revenue sharing models for leasing standalone passenger corridors and branch lines.

Companies will also have the flexibility to maintain and own stations on these proposed private lines. They may also be allowed to set different fares on these lines after the approval of the upcoming Rail Development Authority of India, which will be free to recommend fares. 

 

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