Railways tenders to open for all in market as Ministry scraps policy favouring PSUs

In a significant development, the Ministry of Railways announced that they have amended their policy of allotment of railway tenders and have opened the space for the private sector to fight for bagging railway contracts.

The decision was announced by the Railway Ministry led by Union Minister Ashwini Vaishnaw, allowing the private sector companies to compete with the public sector. The decision also takes into account the public sector companies owned by the Railways itself, they will too face the competition for the allotment of Tender.  The decision was taken keeping in mind the growth and development of Railways. 

Railways tenders open for all in market as Ministry scraps policy for PSUs

The Railway Ministry revoked a previous policy, announced during Ashwini Vaishnaw's predecessor Piyush Goyal's tenure in December 2019, that required the Railway Board to screen and allocate work to eligible public sector firms. The winning PSU will next put out a tender for the actual work to be done among contractors in the open market. This policy was put in place so that Railways may benefit from competitive bidding among PSUs and gain a pricing advantage.

"The policy approved by the Board, in their meeting held on 19.12.2019 to introduce competition amongst the PSUs for awarding Railway works, hereby stands withdrawn with immediate effect," the order stated.

Railways has decided that instead of its board deciding which PSU should get the job, the zonal railways concerned will float open tenders directly in the market in which the PSUs can also participate, extending the benefit of price advantage and doing away with the policy of protectionism that PSUs enjoyed.

The Tuesday order said, "To further enhance benefit from competitive bidding, it has now been proposed to withdraw the policy for competition among eligible PSUs for allotment of work by Railway Board and the same shall now on be done through open tendering with immediate effect. Also, all such works awarded to PSUs under existing scheme for which LOA (letter of award) has not been issued or MoU signed or no major contractual obligation undertaken in any form, will also stand cancelled with immediate effect," it stated.

With Inputs from ANI

Image: ANI/ PTI