December 22, 2017 / 2:54 PM / in 6 months

Japan's Sumitomo, Jindal Steel among eight bidders for India rails tender: source

NEW DELHI (Reuters) - Japanese trader Sumitomo Corp (8053.T) and India’s Jindal Steel and Power Ltd (JNSP.NS) are among eight bidders competing for Indian Railways’ first global tender to supply 487,000 tonnes of rails, a government official told Reuters.

FILE PHOTO: Railway employees work on the tracks, as a freight train approaches, at the Tughlakabad railway station in New Delhi, India April 20, 2017. REUTERS/Adnan Abidi/File Photo

The other bidders are East Metals AG, a unit of Russian steel and coal producer Evraz (EVRE.L), Austrian company voestalpine Schienen, CRM Hong Kong Trading Ltd, New Delhi-based Atlantic Steels, French company British Steel France Rail and China-based Angang Group International, according to the official with direct knowledge of the matter.

The official declined to be named because the information is not public. The tender was opened earlier on Friday.

Railways chairman Ashwani Lohani, spokespeople at East Metals AG, and Austrian company voestalpine did not immediately respond to Reuters’ emails while spokespeople at the other companies could not be contacted.

The tender will end the monopoly of state-owned Steel Authority of India Ltd (SAIL) (SAIL.NS) in supplying rails to the world’s fourth largest rail network. Loss making SAIL has struggled to meet railways’ rising demand.

The steel and rail ministries, however, have been at loggerheads over the state-run network’s decision to buy rails from overseas, despite assurances of supply from SAIL and New Delhi-based Jindal Steel and Power (JNSP.NS).

Following several meetings, the railways slashed its tender size by more than 30 percent to 487,000 tonnes of rails after SAIL said it would scale up supply to 950,000 tonnes in 2017/18 and 1.5 million tonnes in 2018/19, according to the minutes of a committee meeting held on Dec. 21. (bit.ly/2DtNodv)

The committee on domestically manufactured iron and steel products for government projects is headed by the top civil servant in the steel ministry.

The panel also gave a one-time waiver to the railways to source rails from overseas on the condition that it would give 20 percent of the contract to a domestic steel maker.

The clause could help Jindal Steel win its first contract with the railways.

The waiver came through following a meeting held at Prime Minister Narendra Modi’s office on Dec. 19 between steel ministry officials and Railways Minister Piyush Goyal, according to a document seen by Reuters.

Spokespeople for Modi’s and Goyal’s offices did not immediately reply to requests for comment.

Modi’s office recently asked all government departments to prioritize the use of local products in state projects, after domestic companies objected to the tender by the railways.

Reporting by Neha Dasgupta; Additional reporting by Mayank Bhardwaj; Editing by Krishna N. Das and Elaine Hardcastle

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