Indian railways pins hopes on govt sector

Written by Rajat Arora | Updated: Mar 19 2014, 14:29pm hrs
With its ambitious public private partnership (PPP) initiatives still to attract investors, the Railways is now hoping that joint projects with states and public sector undertakings will help it meet its private investment plan.

The Railways has set a target of Rs 6,005-crore investment from the private sector---under its existing PPP model--in its annual plan for the next fiscal.

Several states have come forward to invest in constructing rail links and other infrastructure projects. Some PSUs such as Coal India are also expected to invest in the first and last-mile rail connectivity projects. Then, there are port companies which have to set up port linkages, finance commissioner (railways) Rajendra Kashyap said.

For the Railways, getting investment through PPP has been a tough task and the flow of private investment other than the first and last-mile connectivity projects have been dismal.

We are trying to re-model the PPP plans that are also attuned to the interest of states and PSUs. This would go parallel with our initiative to attract the private sector in certain railway projects such as loco factories, Railway Board chairman Arunendra Kumar had told FE after the presentation of the rail budget in February.

States such as Karnataka and Haryana have offered the Railways free land to set up rail lines and factories. The national transporter is willing to even offer equity to government-owned entities for projects in these states.

In the 12th Plan, the Railways has an ambitious target of R1 lakh crore under its PPP initiative but there are apprehensions that the private sector or multilateral agencies would not invest in projects such as the high-speed rail corridor.

Only port connectivity projects have attracted private investment, and other projects such as the high-speed corridor and Rs 20,000-crore Mumbai elevated corridor have not been able to find investors, the official said.

According to railway ministry officials, Dhamra Port, a joint venture of Tata Steel and L&T, Rewas Port of RIL, Balaji Infra Projects' Dighi Port and Astaranga Port of Navayuga Engineering, among others, have received the Railways' nod to build rail links under the participative policy of rail connectivity, which for the first time allows private investment for building core rail infrastructure.

The Orissa-based Dhamra Port will build a 60-km rail link connecting the port with the nearest rail line, costing R760 crore. Dighi and Rewas ports in Maharashtras Raigad district will invest around R400 crore each in building 30 km of track each, connecting with Konkan

Railways line at Mangaon-Indapur, while Astaranga in Orissas Puri will be building a 73-km rail link costing R700 crore. Palanpur-Samakhiali is also expected to get R1,000 crore of private investment. The Jaigad port in Maharashtra and Hazira port in Gujarat are also expected to invest around R700 crore in building rail connectivity.

There will be several other projects which will come up in coming days. Rail linkages with port will also boost investment in private freight terminals, for which the 12th Plan target has been set at R2,800 crore, a railway board official added.

The Railways' PPP record has been dismal, in the 11th Plan private investment in railways was 4% of the Plan outlay, which is far less if compared to the private capital share in other sectors like ports (80%), telecom (82%), electricity (44%), airports (64%) and roads (16%).

In 12th Plan also, projects such as railway station modernization, constructing of 534 km of eastern freight corridor stretch, high speed rail corridor project, energy projects, coach manufacturing units and several other have failed to attract any response from the private sector.