Pace of rail project awards doubles this year

New Delhi:  Railway projects worth Rs 10,594 crore were awarded in the April-October period, first seven months of this financial year, more than double the value of those awarded in the same period last year, at Rs 4,279 crore.

This comes some months after the railway ministry was rapped by the Prime Minister’s Office (PMO) for slow pace of capital spending and progress on key projects. Suresh Prabhu, the minister, has pushed hard to lure investors, to meet the financial year’s targeted spending of Rs 1 lakh crore.

Among the projects awarded last month was a Rs 1,102- crore contract to Alstom Transport India by Lucknow Metro Rail Corporation, for train sets and signaling systems for the new network planned for the city. The contracts for civil works and electrification of the under-construction Rs 82,000 crore Dedicated Freight Corridor project has also pushed up projects award activity.

“Most of these projects involve engineering, procurement and construction (EPC) contracts. Relying on EPC in the wake of limited success in PPP (public-private partnerships) is a correct strategy. If the current rate of project award continues in the railways, the government would be able to award around Rs 2 lakh crore of EPC contracts over five years,” said Abhaya Agarwal, partner-infrastructure at research and ratings agency Ernst & Young.

He said a major cause for the improvement in award of rail projects is the ministry’s decentralising of powers to delegate works to the zonal railways, apart from the huge budgetary support. “This is a very encouraging sign and would allow the railways to create more capacities within a short time frame,” he said.

The railways’ plan size is Rs 1 lakh crore for this financial year, a 53 per cent jump over 2014-15’s spending target of Rs 65,000 crore.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.