New Delhi: A month after telling private players interested in plying trains that there would be no overarching body to regulate tariffs or fares for private trains, the Indian Railways has told the Lok Sabha that it is studying the feasibility of developing a new mechanism for tariff regulation to meet the requirements of private train operators.
Responding to a question by BJP MP Nalin Kumar Kateel, Railway Minister Piyush Goyal said Monday, “A regulatory mechanism with statutory backing is being considered to meet the requirement of changing scenario like private passenger train operators and other public private partnership ventures.”
He added, “Accordingly, a study is being entrusted to enable rail regulatory mechanism with statutory backing including authorisation of any existing regulator.”
Last month, the Railways had told firms that the fares for private trains will not be regulated by any authority and the private concessionaire will have the autonomy to determine fares.
In a corrigendum issued in August, when the Railways met private players for the second pre-bid meeting for the running of private trains, it told the interested players, “There would be no fare regulation and the PTOs (Private Train Operators) shall have autonomy to determine tariffs/fares.”
Will they, won’t they?
Regulation of fares of private trains has been a sticky point for companies that have been trying to seek clarity from the Railways on whether private concessionaires would be allowed to determine their own prices.
According to reports, at the pre-bid meeting held in August, one of the firms had said, “As stated in the clause (in the corrigendum), it is clear that the fare will be decided by the concessionaire, but it is not clarified whether such an arrived fare will go through an adoption/approval from any authoritative/regulatory body.”
The ministry was reported to have responded that the “fare will be market-driven and no approval is contemplated”.
However, the same corrigendum did not rule out the involvement of a regulator in price determination in the future either.
“There is a possibility of a rail regulatory body being set up in India in the future to regulate various entities and their functions. Functions of such a regulator may include economic regulation. Any form of economic regulation may have impact on Project revenues,” the corrigendum said.
“Based on its objectives, MoR (Ministry of Railways) may consider clarifying that the Project would not be under oversight of the proposed regulator. This would provide clarity/certainty to interested bidders,” it added. “However, if MoR desires to have this Project under the oversight of regulator in future, provisions to this effect should be included.”
ThePrint approached the ministry spokesperson via phone calls and text message for a comment on the contradiction, but there was no reply. This report will be updated if a response is received.
‘Regulatory mechanism is being considered’
Sources in the ministry said the issue is steeped in confusion since it is a new sector, which is just opening up. Excessive regulation could deter private players from coming forward.
Yet, they said, the Indian Railways, which has hitherto complete monopoly in the sector, cannot afford to leave it completely unregulated.
In his reply in the Lok Sabha, Goyal also said the feasibility of a new mechanism is being studied since the previously announced Rail Development Authority (RDA), which is meant to regulate pricing of services commensurate with costs, was “advisory” in nature.
“Resolution for setting up of Rail Development Authority (RDA) has been notified. RDA has been envisaged as advisory/recommendatory body. RDA is yet to be operationalized. However, in the context of the limitation, being advisory in nature, a regulatory mechanism with statutory backing is being considered to meet the requirement of changing scenario like private passenger train operators and other public private partnership ventures,” Goyal said.
In 2017, the Union Cabinet had notified the RDA with a corpus of Rs 50 crore to regulate pricing of services commensurate with costs, recommending measures for enhancement of non-fare revenue, ensuring protection of consumer interests, by ensuring quality of service and cost optimisation, promoting competition, efficiency and economy, etc.
Speaking on why a new mechanism is being studied despite the RDA, a railway ministry official said there is no issue with multiplicity of authorities since it can help in streamlining the private sector investment process.
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