With an one eye on the Bengal elections, Mamata Banerjee had announced 19 railway projects in the state, mostly in the heavy engineering sector, but none has taken off yet.
According to a ministry official, of the 19 projects, only two are more or less finalised — a coach factory at Kanchrapara and an electrical loco component factory at Dankuni with the bidders already shortlisted. In fact, the bidders for these two projects were shortlisted last year but the railways couldn’t go for the financial bid since it was cash-strapped and couldn’t provide equity to the projects.
With the Indian Railway Finance Corporation (IRFC) selling tax free bonds worth $200 million last month, some of the projects are likely to see the light of day.
A railway board member told FE according to the recommendation of the six-member committee that was set up to find means of raising capital to fund socially desirable projects, IRFC has raised $ 200 million or around R10,000 crore through selling five-year bonds on March 28. This has given the railways the capital to provide equity to some of its projects.
At the end of the year, the railways in its capital fund had around R3,200 crore, of which it had to withdraw around R2,700- 2,800 crore for maintenance of its existing railway tracks and manufacturing facilities. The railways development fund was left with only R250 crore and this could by no means provide equity to the projects, the official said.
He said it was also estimated that after providing equity to all the PPP projects ( almost all the 19), the railways would have to fork out R8000 crore annually to run the projects and this spending was not feasible unless the projects were understood to be commercially viable.
So all the PPP projects were kept on hold and a six-member committee was formed to find out means of raising funds to extend equity capital to the PPP projects. So far the provisions of equity has been made for the Kanchrapara and Dankuni projects and financial bids will shortly be invited after delays since August