Indian Railways aims to attract private investments worth R50,000 crore for its expansion projects during the 12th Five-year Plan period, attempting a break from its poor track record of winning corporate money so far. The national transporter?s policy shift is not spontaneous but under pressure from the Prime Minister and the Planning Commission.
However, there is no definite plan of action yet to design and award public-private partnership (PPP) projects that could generate sufficient corporate interest. Railway projects have attracted barely R8,000 crore private investments during the current Plan period.
According to official sources, projects that could be implemented in the PPP mode include the Ahmedabad-Mumbai-Pune high speed rail corridor, the dedicated freight corridor which is integral to the Delhi-Mumbai industrial corridor and a clutch of locomotive and coach factories (see chart).
Railways plans to award projects worth R1.16 lakh crore in five years and private firms are expected to bring in 43% of the finances required, sources said.
Private investors have stayed off railway projects thanks to delays in taking decisions and project designs which did not ensure good returns. The private funds which came in during the current Plan period went mainly into station development and track laying.
The transporter has forecast R7.2 lakh crore investment during 12th Plan starting April 1, 2012. According to a recent presentation to the high-level committee on infrastructure financing headed by ex-deputy governor of Reserve Bank of India Rakesh Mohan, Indian Railways needs R5.2 lakh crore of public investment during the period. While Indian Railway Finance Corporation (IRFC) would raise Rs 1 lakh crore, the balance must be generated internally or brought in through PPPs.
?This time around, we will indeed make a difference when it comes to PPP projects. Railways doesn?t have enough resources on its own and the government can?t keep funding our plans for ever. So, PPP is the only way forward,? railway minister Dinesh Trivedi told FE.
PPP is increasingly an important source of funding infrastructure projects. The government envisages infrastructure investments worth R41 lakh crore or $1 trillion in five years. As per an estimate by the Planning Commission, the private sector could contribute nearly half of this proposed investment. The Rakesh Mohan committee was set up in 2010 to suggest ways to improve infrastructure finance.
Key projects announced by railways since 2007 ? including manufacturing locomotives, engine components and coaches ? are yet to take off. The delay attracted the attention of Prime Minister Manmohan Singh and Planning Commission. In a meeting in June, Singh asked railways to fast-track project awards so that private investments could be realised. ?Huge delays in project designing and awards put a question mark on the intention of railways,? a senior official in Planning Commission said.
Railways financial commissioner Pompa Babbar said factors beyond the control of railways have held up PPP projects so far. ?If any government agency prepares papers that are loaded against the interest of railways, we have to revise the same and safeguard our interests,? she said.
When asked about the strategy to attract private investment in 12th Plan, a senior railway ministry official: ?We have planned award of projects on locomotive and coach factory and construction of a corridor for high-speed rail in 12th Plan period to generate the estimated investment.?
On its dependence on public money, another ministry official said railways wants to add capacity by laying new lines and acquiring rakes. ?Public investment has to continue till we build a substantial capacity. Capacity so created can then help railways in generating higher internal resources and IRFC in raising funds from the market,? he said.