Railway PPP projects stuck on the slow track amid investor apathy

Written by Rajat Arora | New Delhi | Updated: Feb 6 2013, 07:32am hrs
The Indian Railways plan to attract investments of R83,000 crore through public-private partnerships during the 12th Five-Year Plan is languishing in the loco shed, thanks to weak investor interest, poor project design and lack of coordination among various wings of the government. It looks set to repeat its 11th Plan flop , when it attracted a paltry R8,000 crore into projects against a target of R50,000 crore.

Some PPP projects are still on the drawing board, raising question marks over their future, while many others are behind schedule. Despite a direction from Prime Minister Manmohan Singh in December to set timelines for these projects, there is little clarity on them. The cash-strapped railways, which spends approximately R90 to earn R100, is depending on PPPs to meet a fifth of its R4.56-lakh-crore investment target for the current Plan period.

Here, we track the progress of several high-profile railway PPP projects.

World class stations:

In 2007, the UPA government announced plans to renovate 100 major railway stations with around Rs 10,000 crore of private funds. A core committee was formed to monitor the project. With railway ministers in the past five years revising the list of stations for renovation, the project remains on paper. Private players have stayed off the project, questioning its commercial viability. The Railways itself seems to have scaled down the plan: The newly-formed Railway Station Development Corporation is planning only five stations to redeveloped with private investments: New Delhi, Anand Vihar (in the capital), Chandigarh, Bhopal and Pune.

540-km stretch of the eastern freight corridor:

Even as work proceeds on the World Bank and JICA-funded Western and Eastern Corridors, the 540-km line from Sonnagar in Bihar to Dankuni in Bengal part of the 1,839-km Eastern Corridor has found no takers. According to a rail board official, private players have found the project too stiff. Railways has already had several meetings with major infrastructure companies.

Mumbai elevated corridor:

The Rs 21,000-crore project had initially attracted infrastructure majors like IL&FS, GMR and Larsen & Toubro. However, many of them are now re-evaluating the project. The state support agreement with Maharashtra is also yet to be signed. The time line for bidding set by the Prime Minister is February-end, but the project is expected to be delayed by at least three months. Investors need more time as its a big project and various issues must be worked out before the bidding starts, a senior railway officer told FE.

Rail loco factories in Bihar: The future of Rs 2,053-crore diesel loco factory at Marowhra, Bihar and electric loco unit at Madhepura looks uncertain. The proposal to build these factories was mooted in 2007. The Railway Board had invited 11 bids for these projects. American giants such as GE and EMD are in the short list, but there is no time line set yet for awarding the projects. There were issues related to assured off-take of locomotives (a demand of private players), the duration of maintenance of these locos by the companies and land transfer. All these issues are being resolved, said a rail board official. The PM had set a deadline for the bidding to start by December 31, but that was not to be.

Multi-modal Logistics Parks:

The plan was to set up about 20 logistic parks, with an estimated investment of about Rs 10,000 crore from private sector. There is no progress on the project yet.

Commercial utilisation of surplus land: The plan to lease railway land to private players for building multi-function complexes is still on paper. It was expected to earn railways Rs 6000 crore.