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News Entry# 419289
Sep 23 2020 (13:54) Railways studying new mechanism to regulate private train fares, Goyal now tells Lok Sabha (
IR Affairs

News Entry# 419289  Blog Entry# 4723219   
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In August, the Indian Railways had told interested companies that the fares for private trains will not be regulated by any authority.

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.”

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.”
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