NEW DELHI: India and Russia are locked in a tussle for the control of a joint venture company that has won an approximately Rs 30,000-crore contract to build 120 new Vande Bharat trains and maintain them for the next 35 years.
Metrowagonmash, which is part of Transmashholding, Russia’s largest transport engineering company specialising in developing, designing and manufacturing of rolling stock for railways, had in partnership with Indian public sector undertaking Rail Vikas Nigam Ltd (RVNL) successfully bid for manufacturing 120 Vande Bharat trains and their maintenance for the next 35 years.
Metrowagonmash owns 80% and RVNL 20% of the company that won the contract. The RVNL now wants a larger share of 69%, leaving 26% for Metrowagonmash and 5% for a third partner, Locomotive Electronic Systems (LES). In a letter dated April 25, 2023 to Metrowagonmash, the RVNL said it “has incorporated a fully owned private company by the name of Kinet Railway Solutions Ltd (KRSL).
This company will act as the SPV (special purpose vehicle) that will sign the Manufacturing-cum-Maintenance Agreement (MCMA) with the Ministry of Railways and subsequently implement the project.” The RVNL said in the letter that being a government company it is better placed to handle issues like getting clearances and engaging local manpower.
It further said that “given the present geo-political situation and the fact that the RVNL is a trustworthy public sector unit having robust standing with public financial institutions, it will be easier for the SPV to mobilise funding from the domestic market at the most competitive rates.”
The PSU said “it will be a win-win situation for all partners if RVNL plays the primary role in this initiative…” RVNL asked Metrowagonmash to provide its consent for its proposed shareholding of 69% for RVNL, 26% for Metrowagonmash and 5% for LES. But Metrowagonmash protested and took up the matter with the Russian government.
The trade representative of the Russian Federation then sent a Note Verbale to the government of India on May 8 asking it to direct RVNL to stick to the original contract. The tussle between the two companies is continuing and the matter is now likely to be settled at the top level of the two governments.
Vande Bharat deal
At present, RVNL has 20% stake in the JV. It wants it hiked to 69% citing the present geo-political situation. The JV bagged a Rs 30,000-crore contract to manufacture and maintain Vande Bharat trains