Ladakh stand-off: Railways cancels Chinese contract for dedicated corridor

Govt has already approached the funding agency, World Bank, seeking termination of contract citing poor progress

Amid the India-China faceoff at the Galwan Valley in the east of Ladakh, the Indian Railways on Thursday decided to cancel a Rs 471-crore contract given to a Chinese company for a dedicated freight corridor (DFC). 

The Railways said it would cancel the signaling and telecommunication work for a 417-km stretch on the Kanpur-Deen Dayal Upadhyay section, which is part of the eastern DFC being set up by the railway PSU Dedicated Freight Corridor Corporation (DFCCIL). 

 

The government has approached the funding agency, World Bank, seeking termination of the contract citing poor progress. For such projects, cancellation of any contract requires a nod from the multilateral agency. According to a railway official, the government might have to consider funding the project itself in the event of the World Bank deciding not to terminate the project. 

The progress of the project was just 20 per cent though the contract was awarded in 2016, affecting the overall completion deadlines for the DFC. The Railways had been thinking about cancellation for almost two months now but the flare-up at the border proved to be the catalyst.

Among the reasons the DFCCIL has cited for termination are the reluctance by the Chinese firm to furnish technical documents, non-availability of engineers at the site, delay in the progress of physical work, late material procurement and no progress in work despite repeated meeting with the company. “In view of poor progress, it is decided by the DFCCIL to terminate this contract,” said a railways document.

While the Eastern DFC is funded by the World Bank through Rs 13,625-crore loan, Japan International Cooperation Agency is providing debt of Rs 38,722 crore for the western DFC.  The total project cost for Eastern DFC comes to around Rs 30,358 crore, while that of Western DFC is Rs 51,101 crore. 
 

The controversial cancellation comes amid ongoing talks between the World Bank and the Railways for funding the last leg of the Eastern DFC between Sonnagar in Bihar and Dankuni in West Bengal. The 538-km stretch, estimated to cost Rs 15,000 crore, was supposed to be built on public-private partnership mode. 

Metro projects face political ire

On Thursday,  Maharashtra Minister Jitendra Awhad asked the Centre to scrap the Delhi-Meerut Metro work contract bagged by Shangai Tunnel Engineering Corporation (STEC).  

The Chinese firm is also a joint venture partner for L&T. The JV was awarded package one and package seven for Mumbai’s underground metro corridor in 2016 and is under implementation. Outside the JV, STEC was earlier awarded phase one of package 15 for the Mumbai metro.  An email query sent to L&T and Tata Projects on Thursday remained unanswered. A response from Mumbai Metro Rail Corporation was not available at the time of going to press.  

The other Chinese company executing packages for the Mumbai metro network is China Harbour Engineering. In 2018, Tata Projects and China Harbour Engineering were awarded package nine and package 11 on the Mumbai metro-4 corridor.  “Tata Projects is the primary bidder for that package, so I do not see any concern,” said R A Rajeev, commissioner for Mumbai Metropolitan Region Development Authority. The authority is the nodal authority executing the Mumbai metro-4 corridor.

“In Mumbai Metro, though ITD Cementation and Tata Projects have taken on most of the execution….these helped us in bidding and understanding global execution practices.  We are very close to completion of our section,” a Tata Projects spokesperson said.