Ministry of Railways is set to form special purpose vehicles (SPVs) with minisrty of coal and Odisha government to help Coal India...
Ministry of Railways is set to form special purpose vehicles (SPVs) with minisrty of coal and Odisha government to help Coal India ramp up its production and meet the target of 1.5 billion tonne by the year 2020. The three parties signed a memorandum of understanding (MoU) on Monday to form SPVs or project-specific joint venture companies in the mineral-rich states.
Indian Railways will hold 26% in the proposed JVs through its public sector holding company Ircon International Ltd. while the coal ministry will, directly or through any of its PSUs, own 64%. The balance 10% will be with the government of Odisha.
In the FY16 railway budget the minister Suresh Prabhu gave emphasis on modernization and consolidation of the national transporter which is struggling to cope up with the congestion in its major routes which includes the eastern corridors. He specifically stressed on the need of decongesting major railway corridors and capacity building to prepare the railways for the future and improve its financial health.
States like the West Bengal, Chattisgarh & Odisha are expected to be part of the initiative. “We will be signing many more such agreements with the states like Chattisgarh and (West) Bengal in the near future. These measures will not only boast these states’ development but will also help the country become economically stronger as coal imports will eventually come down.”, Prabhu said during the occasion.
Under the agreement, the proposed JVCs will procure its required land with active support from the Odisha government in acquisition and other clearances such as forest or environmental bottlenecks.”. In FY 15, out of R1,05,312 crore of revenue earnings from freight coal alone contributed 46% or R48,373 crore.
According to Piyush Goyal, the minister of state (independent charge) for power and coal, “such understanding will be crucial for the coal ministry to reach the targeted 1 billion tonnes of annual coal excavation pan for Coal India (CIL) by 2020”.
“This is a win-win situation for all the parties. While the rail will be able to get benefit by utilizing the huge cash reserves that the PSUs like CIL has, the state will get entire revenue from every kg of coal taken out from their mines, which they can now use to fulfill their aspirations on the development front”, he added.