Faced with a financial crisis, Railways have put on hold all PPP projects, including proposed plants at Kanchrapara in West Bengal and Madhepura and Marhora in Bihar.Railways have to commit approximately Rs 8,000 crore (Rs 80 billion) per annum for these three projects -- an electric multiple unit/coach factory at Kanchrapara, diesel locomotive factory at Marhora and electric locomotive plant at Madhepura -- for assured purchase orders.
"In the current situation, the railways is finding it difficult to commit for the assured offtakes," Railway Ministry sources said.
"Because of the fund crunch, railways have put a temporary hold on these PPP projects and have set up a committee to examine how funds can be provided to PPP projects and also to its own production units", the multinational companies mainly from the USA and Europe are involved in the bidding of these three PPP projects in Kanchrapara, Marhora and Madhepura.
"The committee comprising six senior railway officials is to examine how assured purchase contracts can be provided because
railways also have their own production units.
"If assured offtakes are entertained then there will be very little funds left for its own units," they said.
Railways' annual purchase is estimated at Rs 15,000 crore (Rs 150 billion) to Rs 18,000 crore (Rs 180 billion) for wagons, coaches and locos.
"If Rs 8,000 crore (Rs 80 billion) is being kept for the three PPP projects then limited funds will be left for its own production units as well as for purchase of wagons," they said.
The committee has to examine the contradictory demands on railway funds.
The committee has been given 15 days time to suggest ways and means to fund PPP projects as well as its own production units.
"So till the committee's report, there is a temporary hold on all these three projects," the sources said.
