Railways to go ahead with global tender

The Indian Railways has decided to go ahead with its global tender for rails despite stiff opposition from the steel ministry, which had flagged the government’s policy of giving preference to domestic manufactured iron and steel for government procurement.

“We are going ahead with the ongoing tender according to the plan,” said a senior Railways official, who added that there were no plans to tweak the terms of the existing tender either.

The Indian Railways has set a target of 3,500 kilometres (kms) for track renewal at a cost of Rs 10,153 crore for 2017-18, which has now been increased to 4,000 kms with Piyush Goyal taking charge as the Union minister. Railways has a memorandum of understanding with the Steel Authority of India Ltd (SAIL) for supply of rails but it turned out that there would be a shortfall in supply of 717,000 tonnes for 2017-18 and 2018-19 and Railways was looking to bridge the deficit with imported rails. The value of the tender was estimated to be to the tune of Rs 3,500 crore.

On an average, SAIL’s Bhilai Steel Plant supplies about 700,000-800,000 tonnes of rail to the national Railways. 

However, according to the provisions of the domestically manufactured iron and steel policy (DMI&SP) for government procurement, Railways had had to seek a waiver or exemption from the Standing Committee, which it had not. It had, however, informed the steel ministry about the tender for imports which conveyed that it would not be possible, following which Railways had approached the Grievance Committee. The preference to locally made steel covers all procurement by the government and public sector undertakings and the steel ministry came out with a notification to this effect. An exception is made where specific grades of steel are not manufactured in the country or where the quantity sought cannot be met from domestic sources. 

Soon after the notification, GAIL had cancelled the tender for procurement of steel for its Jagdishpur-Haldia pipeline to give preference to local manufacturers. The 700-km pipeline for the Bokaro-Dhamra section had a steel component of 170,000 tonnes and the value of the project was Rs 1,200 crore.

Apart from SAIL, Jindal Steel & Power Ltd (JSPL) also manufactures rails. But the national carrier has been procuring steel from SAIL for close to three decades now. 

At a Standing Committee meeting held early November, it transpired that if the eligibility criteria in the tender was altered then it would be possible to meet the requirement domestically. SAIL had assured supply of 950,000 tonnes and JSPL had the capability to supply 200,000 tonnes between December 2017 and March 2018, said sources close to the development, which could help meet Railways’ requirement domestically.

For JSPL, it would, for the first time, mark its entry into Railways’ procurement. Sources however indicated the terms of the tender were not favourable for JSPL. 

According to the eligibility criteria, the tenderer should have supplied a minimum of 1,075,000 tonnes rails during five years from 2010 to passenger traffic/mixed traffic carrying railway systems in operation. 

If a domestic manufacturer does not have proven performance of supply of rails in the past on passenger traffic/mixed traffic railway system and does not meet the eligibility criteria, then it could be considered for developmental order up to 20 per cent of the net procurable quantity.

As of now, Railways is not budging from the terms of the tender.