Public-private partnerships have become the latest mantra for various ministries and public sector undertakings. The rail minister has not been far behind in embracing this innovative route to overcome the railways’ resource constraints.

Lalu Prasad plans expansion of the rail network, technology modernisation and world-class facilities for customers by investment through the public-private partnership (PPP) route of no less than Rs 2,50,000 crore in the next five years.

He hopes to attract investments of about Rs 15,000 crore for the upgradation of stations at New Delhi, Mumbai, Secunderabad and Patna through the PPP route. Lalu Prasad also plans to set up multi-modal logistics parks and units to manufacture electric and diesel locomotives and coaches through open competitive bidding.

According to Lalu Prasad, rail land development will attract about Rs 4,000 crore in 2008-09. Earlier, every rail minister had considered and later shelved plans to make commercial use of the railways’ surplus land.

He also expects container trains and depots, and multi-modal logistics parks to attract investments of Rs 2,000 crore. The options appear to be unlimited and it looks as if a mere invitation may open the floodgates of investments.

The private sector, however, may not be ready to put its money in projects where it is not in complete control. The railway board’s mandarins are also certain to guard their turf jealously.

However, the railways’ experience of the PPP route has so far been quite limited. A major port connectivity project by Pipavav Rail Corporation, a joint 50:50 partnership between the Indian Railways and the Gujarat Pipavav Port, has successfully built a 271km broad gauge link between Pipavav and Surendra Nagar junction on Western Railway.

The double stack containers trains on the non-electrified section of Jaipur and Pipavav have been a success story. However PPP initiatives such as “own your own wagon” schemes have found few takers.

In the UK, a disastrous public-private partnership story has unfolded. Despite the failure of privatisation of the British Railways more than a decade back, the London Transport Authority chose to go the PPP way and nominated Metronet as the prime contractor for upgrading the ageing London underground network.

After Metronet was placed into “administration” following a £2-billion over-run, Gwyneth Dunwoody, the chairman of a committee of British MPs that went into the causes of the fiasco, said, “Any reasonable person looking at the current situation would find scant evidence to sustain a dogma that the private sector will always deliver greater efficiency innovation and value for money than the public sector.”

He went on to add, “If the government is ever again tempted to a seemingly good deal from the private sector, it should recall Metronet’s pathetic under-delivery and the deficiencies in the contract that allowed it to happen.”

Gerry Doherty, general secretary of the Transport Salaried Staff, said, “Metronet pulled off an astonishing two-card trick under this disastrous PPP deal. They picked up all the profit and left the travelling public with all the risks.”

Lalu Prasad has opted for a very wide area for the PPP route and hopefully the railway board’s mandarins will keep their eyes open while not only shortlisting the contractors and drawing up the contracts, but also following up on the execution at every milestone.

The exercise becomes a little problematic with the chief vigilance commissioner breathing down the neck of the poor bureaucrats.

The Delhi Metro Rail Corporation perhaps provides one of the best examples of an efficient mega project via the PPP route, and more importantly, no cost or time overruns. But then you need a Shreedharan to pull it off without a hitch.

(R.C.Acharya was former member of the Railway Board)