SAIL monopoly broken but Railways still short of rail, floats fresh tender

At present, railways is sourcing rail only from SAIL’s Bhilai Steel Plant
The Indian Railways is likely to float a fresh tender to procure rail of 200,000 tonnes worth over Rs 10 billion, to meet the targets on its safety-related works such as track renewal.

This comes after the national transporter placed a developmental order of Rs 5.36 billion for 100,000 tonnes rail on Jindal Steel and Power (JSPL) as part of a global tender. However, the remaining bidders, including Sumitomo Corporation, Angang Group International, Voestalpine Schienen, East Metals, CRM Hong Kong, British Steel France Rail and Atlantic Steel, were edged out since they did not meet the specifications according to Indian standards.

In addition, sources said that SAIL may not be able to supply 1.5 million tonnes of rail required for 2018-19 to meet the railways target, by falling short by at least 300,000 tonnes. If railways adds another 100,000 tonnes that JSPL got, may still require another 200,000 tonnes. The new tender will be for tougher rails that can handle axle load of 25 kg in rolling stock, sources said. It is not yet finalised if the fresh tender will be in bulk or in phases. 

Additional rail is required as the average track renewal target was increased to 4,400 km in 2018-19, compared to an earlier average of about 2,500 km. Interestingly, the sanctioned allocation for track machines increased six-fold to Rs 72.68 billion in 2018-19, from an average of Rs 11.87 billion from 2014 to 2017.

The railways had floated the tender for international procurement of rails on October 18. Though initially the global tender that JSPL won was floated for 717,000 tonnes after assurance for more supply from SAIL, it was revised to 487,000 tonnes, worth an estimated Rs 20.5 billion. At present, railways is sourcing rail only from SAIL’s Bhilai Steel Plant (BSP), both for laying new lines as well as for track replacements.

For the railways, the government had given only a one-time nod for last tender on condition that 20 per cent of quantity procurement is sourced from domestic producers to boost Make in India. With an annual capacity of 750,000 tonnes, JSPL, according to sources, had informed the steel and railways ministry that it will be able to supply up to 600,000 tonnes to railways within 21 days once an order is placed.

During the current financial year, the railways completed 964 km track renewal, meeting 22 per cent of its target. SAIL had been widely criticised over short-supply of steel, compared to its yearly contracts with railways. While in 2017-18, it managed to supply only 900,000 tonnes, this was even worse at 620,000 tonnes in 2016-17. About 15 per cent of SAIL supply faces rejection, or is not usable.