New lines through private participation boost Railways? bottom line
Special purpose vehicles (SPVs) have become the new engines of growth for the Railways. In the last few years, SPVs have provided strategic additions to the Railway?s infrastructure, boosting its freight business and bottom line.
Out of the five SPVs created by the Rail Vikas Nigam Ltd (RVNL), three have already paid back handsome dividends. The three lines have earned the Railways an additional freight of around R19,000 crore, of which R5,000 crore was recorded in last year alone.
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The 301-km Gandidham-Palanpur gauge conversion from metre to broad gauge by the Kutch Railway Corporation Ltd (KRCL)? done in collaboration with Western Railway, government of Gujarat, Kutch Port Trust, and Mundra Port Special Economic Zone?was completed in 2006. KRCL has repaid its entire debt and is now poised to finance doubling the of the 271-km broad gauge alignment from Samarkhilai to Palanpur from own earnings.
The 62-km Bharuch-Dahej link, also with Gujarat footing part of the bill, completed last year provides the Dahej port on the west coast rail connectivity. Similarly the 113-km new line from Krishnapattanam port on the east coast to Obulavaripalle?with part-financing by Andhra Pradesh?though completed for only 21 km up to Venkatachalam on the east coast Kolkata-Chennai trunk route, has started yielding rich dividends.
When completed up to Obulavaripalle, the new line will find itself connected to the Mumbai-Chennai sector of the golden quadrilateral, providing an alternative to Visakhapatnam and Kakinada ports of AP.
In a total planned investment of R4,500 crore in the five SPVs, the Indian Railway?s contribution is only R550 crore, or just over 12%, and the balance being equity provided by other investors and debt raised from the open market.
Unfortunately, the two remaining projects, viz. a 99-km line from Angul to Sukinda costing R818 crore and a 82-km Haridaspur-Paradeep line costing R791crore, are stuck in the long drawn process of land acquisition. The projects may take some time to take off, further delaying evacuation of iron ore and movement of coal from Odisha hinterlands.
With a traffic potential of over 70 million tonnes, the Angul-Sukinda line is a joint venture of RVNL, government of Odisha, Jindal Steel & Power Ltd and Bhushan Steel & Power Ltd and would also serve a host of other industries viz. Jindal Stainless Steel, Visa Industries, Tata Steel , Kalinganagar, Monnet Ispat & Energy, Arcelor Mittal and Rungta Mines.
Haridaspur-Paradeep, a major port connectivity project, was sanctioned as early as in 1994-95, but was recently handed over to RVNL for execution, with the Aditya Birla group and the government of Odisha as equity partners. This line would shorten by 40 km the existing route from Banspani to Paradeep Port, providing a faster route for iron ore exports.
On the anvil are two brand new SPVs, with equity participation by the Railways, government of Chhattisgarh, South Eastern Coalfields Ltd and NTPC. These SPVs would provide new corridors to speed up evacuation of coal.
The East Corridor of about 180 km, from Bhupdeopur-Gharghoda-Dharamjaygarh to Korba, and the 122-km East-West Corridor from Gevra Road to Pendra Road, costing about R4,000 crore, could take three years to complete, if clearances come through.
Once these two corridors are in operation, Coal India hopes to hike its output by 300 million tonnes, inching closer to its target of producing an extra 615 mt by 2016-17?the end of 12th Plan. In the process it would generate an additional freight revenue of R10,000 crore for the Railways. Not a bad deal.
The author is former member, Railway Board. acharya@bol.net.in