Seven foreign steel companies and Jindal Steel & Power (JSPL) have bid for a Rs 2,000-crore contract from the ministry of railways, for an expanded track renewal plan. This is the first time in three decades that rail procurement has been opened for the private sector.
The foreign entities are Sumitomo Corporation, Angang Group International, Voestalpine Schienen, East Metals, CRM Hong Kong, British Steel France Rail, and Atlantic Steel.
Though the bids were opened on Friday, the Prime Minister’s Office had written a scathing letter to the Railways after the global tender was floated on November 28, asking all departments to give priority to domestic manufacturers. “It is very disturbing that the broad message has not been appreciated by various departments,” Prime Minister Narendra Modi’s principal secretary Nripendra Misra in the letter dated December 10. He added that each department should ensure that the tender conditions are strictly in sync with the public procurement order and each tender must be examined from the point of view of the interest of Indian manufacturers.
In a meeting on Thursday, an inter-ministerial committee on domestically manufactured iron and steel products in government procurement, headed by Steel Secretary Aruna Sharma, gave a waiver to the tender on condition that 20 per cent of additional procurement would be from domestic producers to boost Make in India.
Till now, the railways were procuring rails from government-owned Steel Authority of India (SAIL). They decided on an extra global tender after anticipating that SAIL would not be able to supply the 717,000 tonnes required for 2017-18 and 2018-19, as estimated at that time.
SAIL later said, after the bids were floated, that it would supply well beyond this much. The railways went ahead with the bidding process despite opposition from the ministry of steel, which argued home manufacturers must get preference.
graph SAIL will supply the railways 1.5 million tonnes of rail in 2018-19. This global tender is now for 487,000 tonnes, worth an estimated Rs 2,000 crore. The railways’ plan is for 4,000 km of track renewal in each of the next two financial years, 2018-19 and 2019-20. The cost estimated on this for 2018-19 is a little above Rs 10,000 crore.
The railways have planned a rapid modernisation drive, after a series of track mishaps. The ministry has a plan for investment worth Rs 8.56 lakh crore in the next five years, of which Rs 1.27 lakh crore will be on safety.
SAIL has increased its track output target midway during the tender, after a new Universal Rail Mill at the Bhilai Steel Plant came on track with an investment of Rs 1,200 crore. The tender process was on when a standing committee of Parliament, last month, felt Indian steel companies could meet the needs of the country’s railways.
A Rashtriya Rail Sanraksha Kosh (RRSK, a rail safety fund) has been proposed for the next five years. Of Rs 53,000 crore that will be spent on the head of safety in 2017-18, about Rs 20,000 crore will be coming from the RRSK. For the current financial year, the major outgo from RRSK will be for traffic facilities — yard remodelling and like heads (Rs 3,085 crore), rolling stock (Rs 1,731 crore), road safety (Rs 5,213 crore) and track renewal (Rs 9,961 crore).