IR, with the exception of DFC project, witness weak tendering: says Emkay Global Financial report

New Delhi: The government might be busy projecting Indian Railways as the vehicle of economic growth, but the national transporter is yet to catch up on project award and implementation.  Analysts tracking the infrastructure sector say, the Railways, with the exception of the dedicated freight corridor project, is witnessing weak tendering.

“The total value of tenders issued in 2014-15 (across infrastructure sectors) stood at Rs.395,300 crore, a 23 per cent decline year-on-year. We witnessed weak tendering in railways, roadways, real estate, water supply and irrigation,” equity research firm Emkay Global Financial said in its report on the infrastructure and construction sectors last month.

Railway Projects 2014-15Railway projects worth Rs 19,527 crore were awarded in 2014-15. However, the month-wise value of projects has varied significantly, dropping from a high of Rs 5,972 crore in April to Rs 34 crore in August before rising again to Rs 5,088 crore in November and finally dropping to Rs 302 crore in March.

In 2013-14, the railways awarded Rs 30,000 crore worth of projects. The value of projects awarded in March 2015 – Rs 302 crore – was an 84 per cent decline from the Rs 1,858 crore of projects awarded in the corresponding month, a year ago.

Experts point out two reasons for slow railway project awards: The general elections and the subsequent change in government, and the ministry’s focus on streamlining systems. “Now that phase of instability is over and the ministry is taking steps to boost project award, things must improve from now on,” said Vishwas Udgirkar, senior director at Deloitte.

“It is equally important to first implement the projects already awarded. The ministry has identified a priority list of projects to be implemented. That is a good sign.”

Indian Railways has estimated a shelf of pending projects to the tune of Rs 491,510 crore on the basis of originally estimated costs. Of these, the fund requirement for priority works such as doubling new lines, gauge conversion, traffic facilities and electrification, is estimated at Rs 208,054 crore.

Railway officials said prioritisation of works could ensure a sustained flow of funds for projects and focused attention on early completion. These will have a direct bearing on the line capacity which, in turn, will ensure higher earnings and optimal utilisation of assets. The railways have identified 77 projects, worth around Rs 1 lakh crore, for being taken up first.

There has, however, been a significant improvement in the pace of awarding of contracts for the Rs 80,000 crore dedicated freight corridor project. “We have awarded contracts worth Rs 5,800 crore for the Kanpur-Mughalsarai section of the eastern DFCC since November 2014. Work is on in full swing,” said a senior executive of DFCCIL, the special purpose vehicle implementing the project.

Additionally, contracts worth Rs 4,000 crore were awarded for electrification on the Rewari-Vadodara section of the western arm of the project. With DFCC in the final leg of tying up funds from the World Bank and JICA, and 80 per cent of the 11,000 hectares for the project acquired, contracts worth thousands of crores are in the pipeline that will be rolled out in the current financial year.

Facebooktwittergoogle_plusredditpinterestlinkedinmail