The Hindu Business Line : Policy for Concor-type private operation yet to take shape

THE Railways, it is learnt, is yet to firm up policy on private sector participation in the type of operation currently being undertaken by the Container Corporation of India (Concor).

One reason is that the Rail Budget for 2005-06, which allows such participation, was presented a little more than two weeks ago and it is too early for a Government organisation to have the scheme prepared within such a short time.

More important, several issues such as the extent and nature of participation, the challenge to be thrown up by the limited line capacity, manning pattern and probable financial benefits to the Railways, are yet to be sorted out.

Even before the announcement in the Budget, there was no restriction as such on private sector participation. A circular, issued as early as 1994, exhorted private firms to participate in rake movement but the response was hardly anything.

PRCL, a special purpose vehicle with private sector participation, has been formed for the construction, maintenance and operation of the 270-km long stretch between Surendranagar and Pipavav.

But it does not undertake Concor-type operation. A similar model has been worked out for another SPV, the Kutch Railway Corporation, formed for the 300-km stretch between Gandhidham and Palanpur.

The prospective private sector firms keen on participation in rake movement were perhaps not convinced of the 1994 circular and, therefore, had been waiting for a proper Government announcement in this regard.

Now that the announcement has been made in the Budget, these firms, one should hope, will come forward in numbers to grab the opportunity. However, that has not happened as yet, according to Railways sources.

Several considerations might have led the Railway Minister to invite private firms to undertake Concor-type operation. First, the Government might have felt that there was a limit to which Concor, in its present form, could grow for whatever reasons. So the private firms keen to undertake similar operation must be encouraged to come forward, more so when the traffic throughput is projected for a big jump. Secondly, by allowing private firms, the Government perhaps wants to break the monopoly of Concor and encourage competition particularly to ensure competitive pricing.

But one thing is certain. Without major investments in the Railway infrastructure in the form of additional rolling stocks and line capacity, it is impossible to run more trains, no matter whether by Concor or others. This is important because the same infrastructure is also used for running passenger trains. The creation of additional line capacity being still in the hands of the Railways, it might be interesting to know the Railways' plans in this regard, particularly to meet the demand for additional capacity.Several other questions also arise in this context: Will the private sector firms invest substantially in rolling stocks (i.e. wagons and locomotives)? Will the government allow them to import?

After all, the domestic manufacturers of wagons and locomotives will be hard put to cope with the increased demand. Even if it is assumed that the rolling stock acquisition issue will be resolved either by way of imports or by way of hire from the Railways, still a third question arises: who will run them? Employing retired railway employees is certainly not the answer.

Next question: will these firms be interested in investing in terminals and related infrastructure? The cost of setting up a terminal particularly in a city can be prohibitive. Finally, how does the Railways stand to benefit from all this? Only by charging at the same rate it is now charging from Concor?

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