‘Private trains’ fares to not be regulated, operators to decide’: Railways

Fares for private trains that are scheduled to begin operation by 2023 will not be regulated by any authority and will be decided by the private concessionaire only, the ministry of railways has clarified in a corrigendum issued on private train operations.

The national transport has informed firms that have evinced interest in plying private trains along more than 100 key routes that the fares for the trains will be market driven and would not require any approval from a regulatory body.

Bombardier Transportation India, Siemens Limited, Alstom Transport India Ltd are among the 23 firms that have evinced interest in running private trains.

“As mentioned, fares are not proposed to be regulated and Private Train Operators (PTOs) will have the flexibility to determine the fares. To address the inflation impact, PTO(s) may consider increasing the tariffs/ fares. However, it may be noted that PTO(s) would be operating in a competitive environment, and PTO(s) ability to increase tariffs/ fares may be constrained,” the ministry said in the corrigendum document of its request for qualification (RFQ) for private companies to run 151 trains.

The document has also advised the national carrier to clarify to prospective bidders that the project would not be under oversight of a regulator. Railways also stated in infrastructure projects Public Private Partnership (PPP) projects economic risks are generally assumed by the private partner as a “business risk.”

“As per the envisaged structure for the Project, PTO(s) will have necessary operational flexibility to manage traffic demand, including selecting the product offering, determining fares to attract traffic etc,” it added.

A pre-bid meeting was held by the ministry of railways on Wednesday with the firms. The private firms raised several queries regarding flexibility in clusters, eligibility criteria, bidding process, procurement of trains, fares, operations and maintenance, officials aware of the development said.

One of the queries raised by a firm said: “As stated in the clause, it is clear that the fare will be decided by the concessionaire, but it is not clarified whether such an arrived fare will go through an adoption/approval from any authoritative/regulatory body.” The ministry responded by stating that the “fare will be market-driven and no approval is contemplated.”

Railways had earlier indicated that a regulatory authority would be set up to review fares for private trains. In 2017, the NDA government first approved the setting up of the Rail Development Authority (RDA), to make “Pricing of services commensurate with costs, suggest measures for enhancement of Non Fare Revenue, protection of consumer interests, by ensuring quality of service and cost optimization, promoting competition, efficiency and economy”, among other things.

To be clear, railway board chairman VK Yadav has stated that the ministry is planning to set up a regulatory authority in the near future. A feasibility study mentioned in the corrigendum also stated there is a possibility of a rail regulatory body being set up in India in the future “to regulate various entities and their functions.” The feasibility study in the report had advised the ministry to consider clarifying that the project would not be under oversight of the proposed regulator. “This would provide clarity/certainty to interested bidders. However, if MoR desires to have this project under the oversight of a regulator in future, provisions to this effect should be included,“ it added.