Indian Railways yesterday (Friday, 17th July 2020) said that there was no renegotiation of its terms and conditions with the Japanese agency which is funding 81 per cent of the Mumbai-Ahmedabad Bullet Train Project cost.
In an online media interaction, Railway Board Chairman VK Yadav agreed that there will be a rise in the cost of the project but denied that there was any renegotiation on the loan with JICA. “Yes, there is cost escalation, but this is not the right time to review costs. That will be done when we finalise tenders. As in any project, we finalise the estimated cost based on historic cost. But the actual cost is known only when tenders are invited. That is the time when we come to know what the project cost is shaping up,” he said.
Yadav said due to the COVID-19 situation the land acquisition process faced some delays and that by this financial year the process will be completed. He said the physical work on the project will begin after 90 per cent of the land has been acquired. Tenders have also been invited for nine packages so far, he added.
“I want to confirm that there is no renegotiation as far as the terms and conditions of the loan is concerned,” Yadav said. “As far as cost escalation is concerned, in any project whatever the estimated cost may be, when the work is being executed and when work is completed there is bound to be some increase in the cost either due to cost escalation, due to inflation or due to change in design,” he said.
Speaking at an event last week, Railway Minister Piyush Goyal had indicated that the financial aspect of the ambitious bullet train project between Mumbai and Ahmedabad was being reviewed as the post-Covid world will entail “a lot of tightening of the belt”. Speaking at the India Global Week, the minister, however, said the Railways was “committed to these projects” and “we are at the stage of finalising plans and costing” for them.
“Certainly COVID-19 has been a little bit of spanner in terms of the ambitions that we had around the bullet train project and we are relooking at all the projects in terms of the post-Covid world that will entail a lot of tightening of the belt, a lot of cost cutting and improving our efficiencies and aligning ourselves to how travel and transport will work in the after Covid world,” Goyal had said in response to a question on the status of the ambitious project.
“I really think that it’s going to be a before-Covid and after-Covid affair,” he had said. Sources say talks are underway with Japan to explore if Indian companies can take on some of the highly specialised engineering jobs, on the lines of ‘Make in India’, and to bring down the project cost.