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DFCCIL Scraps Signalling Contract with Chinese Firm

Dedicated Freight Corridor Corporation (DFCCL) has decided to terminate a Rs 471-crore signalling-and-telecom work contract awarded to a Chinese company four years ago, citing the project’s overall lack of progress and the firm’s refusal to furnish technical documents.

Though the DFCCL’s decision was in the offing, the announcement is aptly timed to be seen as an economic retaliation against the aggressive neighbour, which has lately precipitated a violent stand-off between the two countries in the Galwan valley.

The contract was awarded to China Railway Signal and Communication Co Ltd in June 2016 through World Bank’s bidding process, to install signalling systems along the 417-km of railway line in the Kanpur-Deen Dayal Upadhyay section.

In April (2020), DFCCIL wrote to World Bank saying it was not interested in continuing with the company due to poor project progress and failures in meeting contractual obligations. Since the Multilateral Funding Agency has the final say over contract it funds, several rounds of discussion were held to explain the issues and the Chinese company’s shortcomings.

“We had put in an application for No Objection Certificate from the World Bank in April (for the termination) and are expecting a reply from it by June-end. We will go ahead and terminate the agreement even if the Bank does not respond.” DFCCIL managing director Anurag Sachan said.

According to DFCCL’s Sachan, the contract given to China Railway Signal and Communication Co Ltd is being cancelled for a host of reasons including the company’s reluctance to meet the contractual obligation to furnish technical documents such as logic design of electronic interlocking. Non-availability of engineers/authorised personnel at the site, lack of progress of physical work due to the company’s failure to tie up with local agencies and lapses in material procurement are among the other reasons cited by DFCCL for the termination of the contact.

According to the April letter, the Chinese company has completed only 20% of the assigned work in four years.

Dedicated freight corridors are planned to be ‘freight-only’ corridors which will make it cheaper, faster, and more reliable to move goods between industrial heartlands in the North and ports on the Eastern and Western coasts. These freight-only railway lines along congested transport corridors were envisaged to ramp up the average speed of freight, which had reduced considerably to as low as 20 km per hour. DFCCIL is a special purpose vehicle under the ministry of railways to facilitate the functioning of these corridors.