Infra bigwigs show interest in railways freight terminal plan

Written by Rajat Arora | New Delhi | Updated: Dec 5 2012, 09:14am hrs
Logistics and Infrastructure majors like Lloyd Steel, Tata Iron, Concor, KRIL and KRIBHCO are among 30 companies that have shown interest in the R2,815-crore Private Freight Terminals (PFTs) plan of Indian Railways.

This, coming close on the heels of good response from the private sector to the R21,000-crore Mumbai elevated rail corridor network, has raised the hope that the country's largest transporter could meet the R80,000-crore investment target in the 12th Plan under the PPP model.

The PFT policy has finally picked up and the response has been encouraging. Many container train operators are also converting their inland container depots to PFTs so that they can handle non-containerised cargo as well, said a senior railway ministry official.

The railways revised its policy of 2010 in April this year incorporating clauses that would ease investment by companies. This has now been lapped up by the corporate sector who after a long wait are now looking positively at the initiative.

The Indian Railways, till now, has notified eight PFTs while 15 other PFT proposals have been approved and additional 12 are under the active consideration of the railways.

The railways had in June 2010 allowed companies to construct PFTs. However, the policy failed to evoke a response from the corporate sector due to some unfeasible revenue-sharing clauses.

In the revised policy, we have simplified the revenue-sharing clause by delinking it from the wholesale price index," said the official quoted earlier.

After the policy revamp, the corporate response to freight terminal finally started picking up and, till date, 28 companies have come forward to set up 35 PFTs, which include 17 greenfield and the rest brownfield terminals. Setting up a PFT requires an investment of between R100 crore and R150 crore.

According to the railways policy, brownfield PFT operators have to share 50% of cargo handling revenue or R20 a tonne whichever is higher with the railways, after two years of operation. The greenfield PFT operators, on the other hand, have to share the same five years after commencing operations. The policy also says that a PFT can only come up at a private land or private railway sidings.

The railways has given a thrust to PPP projects under the 12th Plan, keeping in mind fund constraints and the need to bring in the latest technologies in various operational areas.

It targeted more than 15% of the investment during the five-year plan to come from the private sector under PPP model. The areas to be covered under the R80,000-cr PPP plan include an elevated rail corridor, high-speed corridors, redevelopment of stations, logistics parks, private freight terminals, port connectivity, dedicated freight corridor, loco and coach manufacturing units and energy conservation.