No relation with ongoing conflict, DFCCIL decides to terminate Rs 471 crores contract with Chinese company

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Amid the ongoing war between India and China at the Line of Actual Control (LAC) in Ladakh, this triggered after Monday night’s face-off in Galwan Valley. The move came from the Indian railways. On Thursday, a public sector undertaking (PSU) run by the Indian Railways, Dedicated Freight Corridor Corporation of India Limited (DFCCIL) has decided to terminate the project contract of a Chinese company due to “poor progress”.

In the year 2016, CRSC (China Railway Signal and Communication (CRSC) Corporation) had won the contract. The Railways had given the contract worth Rs 471 crore to a Chinese company, Beijing National Railway Research and Design Institute of Signal and Communication Group in 2016.

The contract given to the company pertained to the signaling and telecommunication work of rail lines on the Eastern Dedicated Freight Corridor’s 417-km long section between Kanpur and Deen Dayal Upadhyaya Junction (earlier Mughalsarai).

The company was supposed to complete the work by 2019. The contract was to be funded by loans through the World Bank. According to The Print sources, if the World Bank does not agree to the Indian government’s decision to cancel the contract with the Chinese company, the Indian railway will fund the project itself.


Termination of contract 

Despite repeated meetings, there has been no improvement in the progress of the project, as four years have passed and only 20 percent of the work has been completed so far.

An official told The-print that, the Railways had already decided to terminate the contract, and that the decision had nothing to do with the ongoing conflict at the LAC.

Managing Director of DFCCIL told The Print that the termination is likely to happen soon due to non-performance. He said, “We have already approached the World Bank seeking their NOC for the termination. We have not heard from them but if there is no reply until the end of June, we will unilaterally terminate the contract and India will find the project on its own.”

Issues with the company 

For termination of the contract, the following reasons have been given in the document by Dedicated Freight Corridor Corporation of India Limited in the document which includes:

  • The Chinese company has failed to furnish technical documents required as per the contract agreement, such as the logical design of electronic interlocking.
  • There is Non-availability of the company’s engineers and authorized personnel on the site which was a serious constraint.
  • Lack of progress in physical work as it had no tie-ups with local agencies.
  • Material procurement not done earnestly
  • No improvement in the progress of work despite repeated meetings at all possible levels

A railway ministry spokesperson said that “Given the poor progress, DFCCIL has decided to terminate the contract.”

According to officials quoted in the IE report, this is the only Chinese presence in the mega Indian Railways project, which is now eyeing to engage players from India.

The contract, worth around Rs 500 crore involved designing, constructing, testing, supplying, telecommunications, commissioning signaling as well as associated works for two lines of 413 km in UP’s New Bhaupur-Mughalsarai section.

Summary
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No relation with ongoing conflict, DFCCIL decides to terminate Rs 471 crores contract with Chinese company
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In the year 2016, CRSC (China Railway Signal and Communication (CRSC) Corporation) had won the contract. The Railways had given the contract worth Rs 471 crore to a Chinese company, Beijing National Railway Research and Design Institute of Signal and Communication Group in 2016
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THE POLICY TIMES
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