Its last rail tender for 4.8 lakh tonne saw only bids for 1 lakh tonne by Jindal Steel & Power, as global players failed to qualify. (Representational photo)

Given the shortage in supply of rails by Steel Authority of India (SAIL), the Indian Railways is all set to float a global tender of 7.5 lakh tonne (likely worth around Rs 4,000 crore). Its last rail tender for 4.8 lakh tonne saw only bids for 1 lakh tonne by Jindal Steel & Power, as global players failed to qualify.

At the start of financial year 2018-19, SAIL had assured to supply 15 lakh tonne of rail to the transporter which was later revised to 12 lakh tonne. However, it is unlikely to be able to meet even the revised target as it is supplying only 70,000 tonne of rail every month, which translates to around 8.4 lakh tonne for the year. For 2017-18, SAIL had committed to supply 11.45 lakh tonne rails, but fell short by 3.14 lakh tonne.

“With availability getting affected due to low supply from Bhillai (SAIL produces rails at two units at Bhillai), we are going for another round of global tender. We can see the writing on the wall and do not expect SAIL to improve its supply rate (during the remaining period of the financial year),” said a railway official.

Even after both the units of SAIL getting operational in Bhillai, the company has not been able to increase production. At the optimum capacity, the plants should be able to produce at least 1 lakh tonne of rail per month, but the state-run company is unable to increase production. The railways, for the first time, floated a global tender last year as it was estimated that SAIL, with which the transporter has a memorandum of understanding, would not be able to fulfil the requirement.

With the current supply rate, the railways is faced with a dilemma to whether reduce its targets for commissioning of new lines so as to meet the planned track renewal target, given it has to be given priority. The requirement of rails has gone up as the railways has renewed its focus on track renewals following the spate of accidents last year, which claimed multiple lives and then-railway minister Suresh Prabhu decided to step down. The railways is targeting to renew 3,900 km of tracks in 2018-19.

“In the last round, no foreign player could match the specification requirements by the railways. There was some or the other shortcoming with each player. So, at the highest level, it was decided that if they are not matching requirements, then their offers (will) be rejected,” said the official.

Of the 4.8 lakh tonne sought during the first global tender, only Jindal Steel and Power (JSPL) was given an order of 1 lakh tonne which qualified under a clause in the tender which required 20% of rail to be supplied by an Indian supplier. However, foreign bidders such as Sumitomo Corp, Angang Group International, Voestalpine Schienen, East Metals, CRM Hong Kong, British Steel France Rail and Atlantic Steel failed to qualify and Indian Railways could not place orders.