Indian Railways to pump in $62 billion for development

by Harish Kunwar(Assistant Director, Press Information Bureau, New Delhi)

Over the decade, private sector participation in the railway sector has increased, though it remains limited. The public-private partnership (PPP) model is becoming increasingly popular in order to mobilize capital and improve operation and management skills. In the past, IR made several attempts to involve the private sector through works or management contracts in areas such as catering wagon ownership and leasing, and joint ventures (JVs) for rail infrastructure projects. As a result, several initiatives were taken up on a PPP basis. These included commercial utilization of railway land, private operation of container trains, catering services, warehouses and wagon procurement. A number of PPP projects are also on the anvil. These include construction of dedicated freight corridors, modernization of railway stations, manufacture of rolling stock, utilization of vacant railway land, development of railside warehouses, construction of passenger terminals and development of VSAT hubs.

It has been assessed that Indian Railways would need to spend around Rs. 2,51000 crore (US$62 billion) on various capacity enhancement measures over the next five year period. A major part of the investment would come from internally generated resources. Budgetary support to the extent feasible would also come forth. However, to meet the massive investment needed, these would need to be leveraged to mobilize adequate level extra budgetary resources. Around Rs. 1,00,000 crore is expected to come from extra budgetary resources including Public Private Partnership (PPP). PPP would, thus, play a crucial role in the attainment of the strategic goals outlined above.

Construction of DFC

It has been planned to construct a new Dedicated Freight Corridor (DFC), initially covering about 2700 route kms. equivalent to around 5000 track kilometers at an approximate cost of Rs. 28000 crore (US$6 billion) linking the ports of western India and the ports and mines of Eastern India to Delhi and Punjab. The construction of this corridor will be implemented through an SPV being created for the purpose through a mix of Engineering Procurement and Construction (EPC) and PPP methods. Ministry of Railways is in the process of selecting a global consultant to advise on the concession agreement, principles of track access charges and other financing and bidding issues. It is envisaged that innovative ideas on design, construction and maintenance of railway to achieve optimal life – cycle costs would be forthcoming through PPP especially as the work progresses on the initial two corridors and further corridors are taken up. The concessionaire could also tap additional ancillary revenue streams through commercial exploitation of and, construction of freight terminal/logistic park/ICDs etc.

World Class Railway Stations

Railway stations at metropolitan cities and important tourist centres need to be modernized to provide world-class passenger amenities and services to the large multitude of passengers using these stations. Indian Railways is planning to do so by attracting private investments in the area by leveraging the land around and airspace above the stations. The concessionaire would be expected to construct and maintain the operational and passenger areas free of cost, share the revenue earned from the real-estate created and hand over the same after the concession period. Altogether 26 stations have been identified in the first stage. These are CST Mumbai (Carnac Bunder), Pune, Howrah (Kolkata), Lucknow, New Delhi, Anand Vihar and Bijwasan at Delhi, Amritsar, Chandigarh, Varanasi, Chennai, Thiruvananthapuram, Secunderabad, Ahmedabad, Patna, Bhubaneshwar, Mathura, Agra, Gaya, Bangalore, Jaipur, Nagpur, Tirupati, Bhopal, Kanpur and Guwahati. Pre-qualification process for bidders for the pilot project for New Delhi Station has been initiated. Redevelopment of Patna, Secunderabad and Mumbai will also be taken up during the current year. Development of other stations and green field passenger terminals would also be taken up subsequently.

Commercial Utilization of Land

Indian Railways has approximately 43,000 hectares of vacant land. These are mostly alongside track in longitudinal strips, around railway stations, and in railway colonies especially in metro and other important cities/towns with potential of being used commercially to generate revenue as well as capital for modernization and capacity addition. A new body, namely Rail Land Development Authority (RLDA) has been set up under the Railway (Amendment) Act 2005 to pursue, interalia, the main objectives of generating revenue and up grading railway assets. 110 sites have already been entrusted to RLDA.

SPV for manufacturing

With sustained economic growth and the resultant demand for rail transport the requirement of rolling stock has increased manifold. The requirement of coaches/Electrical Multiple Units is projected at 22689 vehicle unit for the XI Five Year Plan The gap between the requirement and the combined capacity of the two Production Units at Integral Coach Factory, Perambur and Rail Coach Factory, Kapurthala (around 2500 per annum) is planned to be bridged by augmenting the existing capacity of these Production Units and setting up a new manufacturing unit through a JV under PPP.

Similarly, the requirement of Electric and Diesel Locomotives has been projected at 1800 each during the XI Five Year Plan i.e. 360 locos per year. The existing in – house capacity for the manufacture of these locomotives is presently 150 per annum for Electric and for Diesel. The gap between the requirement and capacity is also planned to be bridged by setting up two locomotive manufacturing units one each for diesel and electric locomotives through PPP. Possibility of PPP through long-term demand guarantee to prospective manufactures of modern wagons is also being explored.

High Speed Corridors

Pre-feasibility studies are being awarded for a few identified corridors to examine. Linking a few of our bustling metropolises with a high speed rail links to facilitate train travel over 600-1000 km within 2.5 to 4 hours. All options including PPP will be explored.

Operation of container trains and construction of Multi-modal Logistics Parks
Private operators have been allowed to manage rail-borne Container Services on Indian Railways. Concession agreement setting out the terms of such operation has been signed with 15 private operators. The scheme is also open for other operators to join. So far private operators have inducted 45 rakes and built three ICDs at Garihassru, Patli and Loni.

Policy framework to facilitate setting up of Multi-modal Logistics Parks (MLPs) in SEZs or private land with rail connectivity has been formulated. The policy also evisages utilization or surplus railway land available at suitable locations for development of MLPs and/or bulk or dedicated freight terminals.

Wagon investment Scheme

The Wagon Investment Scheme (WIS) with provisions for freight rebate and supply of guaranteed number of rakes over periods ranging from 7-15 years for various categories of wagons has been in operation for the past few years. The scheme is being replaced by a new scheme to broaden its appeal to investors providing high-capacity and special purpose wagons. A scheme to facilitate third-party leasing of wagons is also under finalization.

Port Connectivity works

Rail Vikas Nigam Limited (RVNL) has been mandated to undertake capacity augmentation works and port connectivity projects by establishing Special Purpose Vehicles (SPVs) Some of the projects taken up or under consideration of RVNL include Palanpur-Gandhidham gauge conversion project (linking Kandla and Mundhra ports to North India), Haridaspur-Paradeep New Line (linking iron ore mines of Orissa and Jharkhand to Pradeep port), Anugul-Sukinda (linking iron-ore and coal-belts of Orissa), Obulavaripalli-Krishnapatnam – New Line Project linking the Krishnapatnam port of Andhra Pradesh, Bharuch-Dahej and Surt-Hazira projects in the State of Gujarat and Penn-Rewas Port link (Maharashtra)

Catering etc.,

Indian Railway Catering and Tourism Corporation (IRCTC) has been mandated to develop catering services, budget hotels and food plazas at major stations through involvement of private entrepreneurs.

IRCTC is commissioning new Food Plazas in Railway premises with private participation. The license period for food plazas is of nine years with a provision of extension of three years. Already 53 such Food Plazas have been commissioned.

Indian Railways is also in the process of carrying out an examination of the scope of need-based ‘base kitchens’ and ‘launderettes’ with public private partnership to strengthen the infrastructure for on-board services. Call centers are also being planned under PPP by IRCTC to cater to the need for information dissemination to the railway customers.

Apart from the above projects, for which Indian Railway Catering and Tourism Corporation (IRCTC) would act as a nodal agency, Indian Railway is also planning to launch new services for the luxury tourism segment on the pattern of ‘Palace on Wheel’ in partnership with interested State Governments. (PIB Features)