Railways terminates contract with Chinese company but ‘not due to LAC conflict’

The 2016 contract was for a signalling project. If the project’s funder, World Bank, doesn’t accept the decision, the Railways is ready to fund it on its own.

Representational image of an Indian Railways signal | Photo: Pixabay

New Delhi: Amid continuing tensions between India and China at the Line of Actual Control (LAC) in Ladakh, the Indian Railways has decided to terminate a signalling contract worth Rs 471 crore awarded to a Chinese company in 2016.

The contract, awarded to Chinese company Beijing National Railway Research and Design Institute of Signal and Communication Group, was funded by the World Bank. Sources said in case the World Bank is not agreeable to the Indian government’s decision to cancel the contract with the Chinese company, the Indian Railways is ready to fund the project itself.

The project pertained to the signalling and telecommunication work in the 417-km-long Kanpur-Deen Dayal Upadhyaya Junction (previously Mughalsarai) section of the Dedicated Freight Corridor project, which was awarded to the Chinese firm in 2016. In the intervening four years, the project has seen just 20 per cent progress.

An official who did not wish to be named said the Railways had already decided to terminate the contract, and that the decision had nothing to do with the ongoing conflict at the LAC.

“It is the railways’ endeavour to depend as much on Indian talent and resources as possible going ahead,” the official said.

Anurag Sachan, managing director of the Dedicated Freight Corridor Corporation of India Limited (DFCCIL), told ThePrint that the termination was already in the offing due to years of non-performance by the Chinese firm.

“We had already approached the World Bank seeking their NOC for the termination,” Sachan said. “We have not heard from them, but if there is no reply until the end of June, we will unilaterally terminate the contract, and India will fund the project on its own.”

Issues with the Chinese firm

The Indian Railways listed several issues with the Chinese company in the document terminating the contract.

These included the “reluctance of the company to furnish technical documents, as per contract agreement, such as logic design of electronic interlocking”; “non-availability of their engineers/authorised personnel at site was serious constraint”; “physical work could not progress as they have no tie-up with the local agencies”; and “material procurement, which is an independent activity, has not been done earnestly”.

“There is no improvement in progress despite repeated meetings with them at every possible level,” the document states. “In view of poor progress, it is decided by DFCCIL to terminate this contract.”