The Cabinet on Wednesday gave its approval to the ministry of railways to form joint venture (JV) companies with the state governments for mobilising resources for rail infrastructure projects. The minister for railways, Suresh Prabhu had announced in his Budget speech setting up of such JVs for “focused project development, resource mobilization, land acquisition, project implementation and monitoring of critical rail projects.”
The proposed JVs have also been allowed to form project-specific Special Purpose Vehicles (SPVs) with equity holding by other shareholders like banks, ports, public sector undertakings and mining companies. This move is aimed to ensure greater participation of state governments in implementation of railway projects both in terms of financial participation as well as decision making process. The national transporter has signed MOU’s with Odisha, Maharashtra, Kerala and Andhra Pradesh to form SPV’s for accelerating infrastructure projects and providing necessary rail link for transportation of raw materials, minerals and finished products.
The JV companies will be formed with equity participation of ministry of railways and concerned state governments. Each JV would have an initial paid up capital of `100 crores based on the quantum of projects to be undertaken. The ministry of railways’ initial paid-up capital will be limited to
Rs 50 crore for each state. Further increase of fund/equity for the purpose of the projects will be done after approval of the project and its funding by the appropriate competent authority.