The Karnataka Rail Infrastructure Development Enterprise (K-RIDE) has abandoned the public-private partnership (PPP) model for leasing trains in favour of direct procurement. This decision follows a lack of financial bids for leasing 306 coaches necessary for the 149-kilometre Bengaluru Suburban Rail Project (BSRP).
The PPP approach, initially proposed by Niti Aayog, aimed to lease these coaches for a 35-year term but encountered hurdles. Despite extending the deadline for bids multiple times, K-RIDE did not receive any financial offers. The hesitation from potential bidders stemmed from the absence of a sovereign bank guarantee, which would have secured payments in case the project did not meet revenue expectations. Three companies—BEML, BHEL, and CAF India Pvt Ltd—had qualified in the tendering process earlier in July 2023 for the procurement, operation, and maintenance of the coaches. However, they ultimately withdrew due to concerns over the financial viability and lack of a guaranteed revenue stream.
With the leasing option now off the table, K-RIDE has opted to directly purchase the trainsets. The state government and Indian Railways will jointly fund the acquisition, contributing ₹2,135.15 crore each for the 306 coaches. The proposal is set to be reviewed by the K-RIDE board on August 31. If approved, it will require state cabinet clearance and, subsequently, approval from the railway board. The procurement strategy involves buying Vande Metro coaches, although the focus will now be on acquiring trainsets directly. The plan anticipates issuing tenders by December, with final selections and prototype deliveries expected within two years. The initial deployment will feature a limited number of coaches, with services starting on a three-coach basis and expanding as demand grows.
K-RIDE’s decision to procure rather than lease reflects a broader trend of adjusting infrastructure strategies to meet evolving project needs and financial constraints.
