Production of first prototype of the Vande Bharat Sleeper coaches by Kinet which the joint venture (JV) between Russian transportation firm Transmashholding (TMH) and Indian PSU Rail Vikas Nigam (RVNL) has been delayed after the Indian Railways demanded that the JV go back to the drawing board to incorporate design changes in coaches.
In an interview, TMH CEO Kirill Lipa said that in a back and forth exercise over six months with the Indian Railways, Kinet has now presented it’s new technical-commercial offer for production of Vande Bharat Sleeper train sets, which will likely see a potential escalation of costs.
The total cost of the Vande Bharat Sleeper project is $6.5 billion, which includes approximately $1.7 billion for the manufacture of the rolling stock and $4.8 billion for it’s the maintenance over 35 years.
In an official response to The Hindu, the Ministry of Railway has confirmed that Kinet’s response to Indian Railways request for technical modifications is under examination by the Ministry.
Mr. Lipa said that the TMH consortium won the tender with approximately a 15% advantage in cost to its closest bidder-competitor, so the cost hike will not be beyond this ceiling.
Mr. Lipa said that this issue was also raised in the meeting of India-Russia Inter-Governmental Commission held earlier in November this month attended by S. Jaishankar, Indian Minister of External Affairs and Russia’s First Deputy Prime Minister Denis Manturov.
The contract agreement between Kinet and Indian Railways was signed on September 27 last year.
Back to the drawing board
After Kinet submitted designs of the first prototype as per contract in May, Mr. Lipa said, “On May 24, we received an official letter from the Indian Railways that requested to change the composition and certain internal features of coaches. We would have liked to start the production by end of this year, but we are now waiting for the Indian Railways response to our new techno-commercial offer.”
Before the change of scope notice by the Indian Railways, Mr. Lipa said that the project schedule demanded that two prototypes shall be ready before the end of 2025, and the production of the rolling stock as well as maintenance shall start in 2026. “If Indian Railway will postpone this process, it will definitely lead to postponement of its execution. For the timeline, we are in the hands of the customer.
“We need to have clear a technical design first of all,” Mr. Lipa reiterated.
Each train set is currently supposed to cost ~ Rs 120 crore, and the contract demands delivery of 120 train sets. Instead of 120 trains of 16-car each, the Railways has now asked for 80 trains consisting of 24 cars each. “Kinet has to supply a total of 1920 Vande Bharat sleeper coaches, and first prototype has to be supplied with 24 months of signing contract in September last year,” the Railway Ministry response stated.
Instead of three lavatory rooms per car, Railways has now asked for four lavatories per car. While earlier there was no mention of a pantry car, Railways has now asked for inclusion of a pantry. Railways has also asked to add luggage zones in each end car of each train, which was earlier not included. Mr. Lipa said, “Now to incorporate these changes we need to change the whole layout in terms of windows and seats. The creation of pantry should be according to the standards with certain anti fire systems.” He further added, “For operations of the Pantry, you need electricity, heating, water supply. So it means redesigning certain cables and the certain pipes which will deliver these elements to the coach. These changes need time and budget.”
In a response to The Hindu, Ministry of Railways confirmed that the design changes were demanded.
Mr. Lipa said that in order to incorporate these changes, an additional agreement will have to be signed which will be legally binding and a production schedule would adjusted to take account of the new inputs.
“On September 17, 2024 TMH and JV’s top-management met Chairman of Railway Board Mr S.Kumar. The Parties agreed that the JV would present its new technical-commercial offer covering all the relevant details,” Mr. Lipa said.
He further said, “We insist on the certain compensation, for redevelopment of the product, because it takes time. So it means that we have overheads in the business which we need to finance, and then it needs just direct cost in terms of redevelopment.”
In an official reply to The Hindu, the Ministry of Railways said that they were evaluating the new offer.
Mr. Lipa said that it has been six months of back and forth and that they are waiting upon the reply of the Railways to continue further work.
Expenditure
Kinet is pumping in $200 million into the Vande Bharat Sleeper project of which $50 million is equity and the rest is a bank loan, Mr. Lipa clarified.
This money will be spent before we start production, in order to produce first prototypes, invest into depots, in order to invest into technology and setting up of the factory in Latur, Maharashtra where work has begun in September earlier this year.
“The revenue will only start flowing in after the prototypes are rolled out in 2026,” he said.
On Sanctions following Russia-Ukraine War
Mr. Lipa said that the railway sector in Russa was among the first sectors sanctioned by Europe and United States. “We immediately switched into other suppliers, local suppliers. So right now we none of our contracts have been postponed or cancelled or even delayed,” he said.
“I was very positively surprised that the contract with Indian Railways was signed two weeks later after the declaration of announcement about the sanctions against our company. So I had different discussions with Indian officials and their position was very stable and open,” he said.
Published – November 22, 2024 06:11 pm IST