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Showing posts with label railway regulator. Show all posts
Showing posts with label railway regulator. Show all posts

Saturday, 3 October 2015

08:08

The fare versus freight ratio of the Indian railways is among the most distorted, with freight earnings heavily continuing to subsidise fares.-Railway Minister

New Delhi: Railway Minister Suresh Prabhu is planning to set up an independent tariff and safety regulatory authority as he aims to end populism in the cash-strapped public transporter by delinking the fare and freight structure from political vagaries.

Suresh Prabhu regulatorThe regulator is part of the government’s reform agenda and will provide leg room to the railways minister to hike passenger fares on the basis of market conditions without fear of a political storm. A decision is expected by the end of the year.

Railway Minister plans Regulatory Body to bring Railways back on track

“The existence of such a body has become critical at this juncture when a generational shift in rail operations is being planned,” Prabhu told.

The regulator is directed at ending the ‘patronage raj’ perpetuated by several railways ministers in past decades at the expense of rail finances, jeopardizing the world’s fourth-largest rail network that has seen a spate of accidents in recent months.

For almost nine of the ten years of UPA rule, passenger fares were not increased.

“The situation might well have served the political interests of past railways minister, but finances of the public transporter have been left in a crumbling state, as a result,” a senior official said.

Losses in the passenger segment earnings last year were estimated at a whopping Rs. 29,000 crore, while the Rail Operating Ratio (paisa spent against every rupee earned) has hovered alarmingly around 92% in past years.

The fare versus freight ratio of the Indian railways is among the most distorted, with freight earnings heavily continuing to subsidise fares.

“Such a situation cannot be allowed to continue. The decision to set up a regulator is a step in the right direction and in consonance with the recommendations of several experts committees including the Sam Pitroda Committee and the more recent Bibek Debroy committee”, a senior official said.

Besides determining the fare and freight structure, the regulator will monitor efficiency and passenger safety issues as well, while also acting as the arbitrator in possible disputes between private investors and the Railways.

An initiative of Niti Aayog vice-chairman Arvind Panagariya, a draft bill to set up the rail regulator by amending the existing railways act has been prepared and is likely to be moved in the coming winter session of Parliament, sources said.
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Monday, 13 July 2015

09:51

In a vertically integrated structure like the IR, unbundling causes huge Headache: Bibek Debroy

In a vertically integrated structure like the IR, unbundling causes huge Headache: Bibek Debroy

Days before Bibek Debroy gave a report of his committee on railway restructuring, he was travelling by a Rajdhani which was re-routed. The troubled member of the National Institute for Transforming India (NITI) Aayog constantly kept tweeting his angst. “Consequences of derailment & rerouting. Pantry car has no provisions. Power car running out of diesel. RRI/Itarsi fire accident.” The report had gone to print by then but it gave Debroy a first-hand experience of a low-end passenger train on a premium train itself. In an interview with Jyoti Mukul and Sudheer Pal Singh, he blames the unhealthy competition among railway zones for poor service quality and inefficiencies. Excerpts:

Your committee’s report has recommended separation of power among different entities and empowering of zones. How will it improve the railway functioning?

Our report envisages three entities – the ministry of railways, the railway board and the regulator. The ministry formulates policy for the sector and not ony for Indian Railways (IR). It decides what is in the interest of the country and railway. We are also talking about functioning of different zones as almost independent revenue centres. People who have not read the report tend to think that we expect every zone to make a profit. We don’t expect that. Every zone should have an independent account. Imagine a train going from Delhi to Howrah does not belong to IR but to a zone. All rolling stock is owned by some zone. If it is a Rajdhani, it belongs to a zone. When it is going, it needs to negotiate and obtain access to track across other zones and sometimes it does not get access. Every zone gives preference to its own train for track. Problems of access to track are not something specific to the private sector. Public zones also have issues with access to track.

The ministry sets the rules for competition in terms of not only the private sector but also zones in the public sector. Currently, for instance, if a north central Rajdhani goes to northern zone territory after being re-routed, it will go with a goods train. Another example is if a Rajdhani is owned by the northern or the eastern zone, it might go for cleaning to a yard in Delhi or Howrah. If an eastern zone Rajdhani goes to Delhi, it will not be cleaned properly. There is tension between the zones all the time.

The railway unions have opposed forming a regulator which has more than tariff regulation powers. Why do you need such a regulator?

The most important task for the regulator is to ensure rules of competition, not only for access of tracks but also standards. Setting of standards like the stuff done by the Research Designs and Standards Organisation (RDSO) can also be a deterrent to free competition. IR must cleanly separate its commercial work from social objective and the government must cleanly pay the Railways for the social function. Every year, the railway budget mechanically shows a figure for social obligation. You show me how it is arrived at? There is no scientific method to it. The regulator will do that computation in future. Finally, the regulator will be in the business of tariffs (rates).

What role do you envisage for the Railway Board?

The Board will have nothing to do with potential private operators. That will be the function of the ministry and the regulator. If a train is passing through a track, that zone has to be compensated. If that figure is not derived at, except thinking of some number than even today, the Railway Board is not balancing the interest of different zones.

When a new train is introduced, the Board should arrive at an internal rate of return but am I not supposed to evaluate the disruption it will cost to existing things? Am I not supposed to consult zones? The Railway Board should do this. There is an inter-zonal coordination committee. Prove to me that the Railway Board does this, except purely whimsically. Even today, it is not doing its job.

Why have the Railway Board then?

You need somebody to oversee the functioning of IR. There are production units, locomotives have to be apportioned out to different zones, wagons and coaches. You can call it a board or a governing council.

Who gets to decide the annual plan, currently a function of the Board?

Part of it is decided at the board level and partly at zonal level. Today, there is too much centralisation. A General Manager of a zone is not asked what kind of coach he wants. Why should he be not empowered to deal with Rae Bareli and tell them this is what is needed? There is capital expenditure of different types. If you are talking about creating fresh track, broad gauge and safety, that’s one level. What kind of locomotives and coaches should a zone get…that is another level. Suppose there is a track completely within a zone. Why should I not have the right to decide on that track what safety or broad gauge? If in addition, I will meet it out of my revenue, give me the right on spending Rs 50 or at least Rs 25, out of every Rs 150 that I earn, for relevant expenditure. There will be issues and internal zonal trade-offs.

Do you think the railway regulator should have powers for macro planning, where inter-zonal issues are involved, just like the Central Electricity Regulatory Commission, which gets involved in transmission and tariff issues when it involves more than one state?

Not entirely. This power stays with the Railway Board. Investment will have nothing do with regulator. At the same time, if I am going to set up a rail track in the north-east, money will be required to come from the finance ministry. How can the Railway Board go and get that money? It will be the minister who has to go and get the money. If it is the Indian Railways’ money, do whatever you want to do with it. For non-IR money, how can the Board go and access that money? That’s the reason you have the railway minister; otherwise you can call the board chairman the minister.

The unions have said the committee has a drastically confused perspective of the European railways and that it wants the failed British model to be adopted…

There is no reference to any model in the text of the final report. There is some data because for every good thing, I will be able to give experience from somewhere in the world and for every stupid thing, I can give example from elsewhere. They are talking about something specific without reading the report. There is unbundling of the track and operating of trains. In the British model, that was privatised before it was reversed. In the interim report, we never said it should be privatised. We said bifurcate. The British model was about privatisation and reversal of it. We want it because there is conflict of interest. In a vertically integrated structure like the Indian Railways, unbundling causes huge headache. You don’t do it unless you have to. We have divided it into initial five years and then five years. In the initial five years, let the regulator come in so that he can resolve issues. If he cannot, then there are recommendations for the next five years.

Aren’t your recommendations bold and politically difficult to adopt?

Not bold at all. One way of looking at it is to say go back to 1950. That’s all we are saying. Whether it is de-centralisation, or accounting standards, the Railways were much cleaner in 1940. The regulator was there before 1924. It is nothing new. Over a period of time, the Railway Board has spread its tentacles everywhere. We are just reversing everything.

(Courtesy: Jyoti Mukul and Sudheer Pal Singh)
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Friday, 12 June 2015

07:30

Cancellation / Regulation of Certain Trains due to Traffic Block on Secunderabad – Mudhked Section

No.157/2015-16
10-06-2015
Secunderabad

Cancellation / Regulation of Certain Trains due to Traffic Block on Secunderabad – Mudhked Section                    

South Central Railway will impose a Traffic Block for launching of RCC Boxes in lieu of few Unmanned Level Crossings and few bridges on Secunderabad – Mudkhed Section of Hyderabad Division on 12th June, 2015. As a result, the following trains will be cancelled / regulated as detailed below:- 

Cancellation:

1)Train No.57558 H.S. Nanded - Nizamabad Passenger scheduled to depart H.S. Nanded on 11th June, 2015 is cancelled.

2)Train No.57557 Nizamabad - H.S.Nanded Passenger scheduled to depart Nizamabad on 12th June, 2015 is cancelled.

3)Train No. 57594 H.S. Nanded - Medchal Passenger scheduled to depart H.S. Nanded on 12th June, 2015 is cancelled.

4)Train No. 57593 Medchal - H.S. Nanded Passenger scheduled to depart Medchal on 12th June, 2015 is cancelled. 

Regulation: 

1)Train No. 57561 Kacheguda – Manmad Passenger will be regulated for 20 minutes at Nizamabad on 12th June, 2015.

2)Train No. 51421 Pune – Nizamabad Passenger will be regulated for 1 hr 5 minutes between Mudkhed and Basar on 12th June, 2015.
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Friday, 8 May 2015

22:52

There is no Shortage of Money for the Railways

There is no Shortage of Money for the Railways

Railway Minister Suresh Prabhakar Prabhu is busy turning around the 160-year-old transport behemoth, having laid out a rather ambitious Rs 8.5-lakh crore (Rs 8.5-trillion) investment road map for the next five years.

The focus is on tapping all possible resources, including foreign agencies, domestic institutions and leveraging rail PSUs, the 61-year-old banker-cum-politician tells Jyoti Mukul and Sudheer Pal Singh in an interview. Edited excerpts:

How have you taken forward the investment road map rolled out in the Budget?

The white paper we brought out was a diagnosis of the financials.

And one of the points that came out as a result of this diagnosis was that there is under-investment in the railways.

With a Rs 8,50,000-crore (Rs 8,500-billion) Plan size for five years, we are focusing on investment to decongest our network and improve the throughput so that we can increase our earning capacity.

We will leverage the books of public sector undertakings.

Projects where the internal rate of return is higher than the dividend will be taken up.

Financing of railway projects cannot be left to depend entirely on internal generation.

It has never happened anywhere in the world.

That is why our dependence on budgetary support and extra-budgetary resources has gone up.

Revenue will increase when volume will increase which, in turn, will increase if you increase the capacity to handle more traffic.

Otherwise, revenue and profit will never increase.

This is the simple philosophy of any organisation.

We will leverage the books of public sector undertakings.

Projects where the internal rate of return is high will be taken up on priority.

Multilateral agencies are willing to provide us assistance.

Also, we will get money from tax-free bonds which the Finance Ministry has already announced.

As of now, there is no problem of shortage of money for the railways.

Wouldn’t it lead to excessive dependence on debt?

Gross budgetary support from the government cannot be the only source for investment. Worldwide, for financing railway infrastructure, debt is taken.

Currently, the debt liability of Indian Railways is just 13 per cent of the traffic receipts, which is lower than in other countries.

For instance, debt was 41 per cent of the German Railways’ total revenue of 39 billion euros in 2013.

What kind of financing model will be put in place for funding projects?

We are exploring the possibility of adopting the annuity or deferred payment model for implementing projects through PSUs.

SBI Caps is rendering financial advisory services to us.

Of the total of Rs 8,50,000 crore (Rs 8,500 billion), Rs 2,50,000 crore (Rs 2,500 billion) would be through market borrowing, including IRFC borrowing for rolling stock.

We will use funds from Life Insurance Corporation, pension funds, etc.

This does not include lending from multilateral agencies, which will come through gross budgetary support from the ministry of finance.

We have the model of leasing through IRFC and it has worked well.

Seventy seven projects worth around Rs 1 lakh crore (Rs 1 trillion) have been shortlisted which we will focus on doubling.

Image: President Pranab Mukherjee shakes hands with the new Cabinet minister Suresh Prabhu after administering him oath of office. Photograph: PTI photo

Your ministry has just announced the implementation of 39 Budget announcements in 36 days since April 1. But critics point out that most of these are related to relatively small and non-core issues.

All of our efforts are customer-centric.

Our Budget document is a five-year plan and this plan is being unfolded by way of the Budget being passed.

So, what we are trying to do is to implement each and every point I have made in my Budget speech.

All of them have been turned into action points.

That is why in the first month itself we have managed to implement 39 of the Budget announcements.

In addition, we have started online monitoring called E-Samiksha of all the projects.

Have you managed to bring the protesting trade unions on board on key issues, such as privatisation?

The unions, which were considered a part of the problem earlier, have become a part of the solution now. Representatives of both the trade unions came and met me today.

And they have told me that the entire organisation was demoralised earlier and I have re-energised it.

So, we are trying to engage with them and work with them.

What role has been envisaged for the Rail Tariff Authority?

We have started the process of setting up a working group to draw the contours of a railway regulator.

The regulator’s role will be more than just tariff.

It will be entrusted with making regulations, setting performance standards and determining tariffs.

It will also adjudicate among licensees and private partners.
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