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  1. Railway ministry seeks to nominate PSUs for station redevelopment

Railway ministry seeks to nominate PSUs for station redevelopment

To set in motion a revamped station redevelopment programme, the ministry of railways is seeking approval to nominate public-sector undertakings (PSUs) in case the proposed nodal agency, its arm Indian Railway Stations Development Corporation (IRSDC), is unable to start work on multiple stations simultaneously or fails to find a financially viable plan.

By: | New Delhi | Published: February 21, 2018 2:42 AM
PSU, Railway ministry, IRSDC, NBCC, Railway Board, RLDA, GFR states, ministry of railways, Rail Vikas Nigam As reported by FE earlier, the station redevelopment model is being revisited as the ‘Swiss challenge’ bidding process evoked lukewarm interest. IRSDC will now be the primary developer. (PTI)

To set in motion a revamped station redevelopment programme, the ministry of railways is seeking approval to nominate public-sector undertakings (PSUs) in case the proposed nodal agency, its arm Indian Railway Stations Development Corporation (IRSDC), is unable to start work on multiple stations simultaneously or fails to find a financially viable plan. To this effect, a Cabinet note for inter-ministerial consultation has been in circulation.“The ministry of railways has prepared a Cabinet note on station redevelopment, leaving room for the railways to give stations to agencies other than IRSDC if it so desires,” said an official requesting anonymity. Given that 600 stations are to be redeveloped, the railways has also proposed that IRSDC can start preliminary work of select stations to showcase the viability and then the stations can be auctioned to private builders. In case there are no takers, IRSDC will complete the project by sourcing funds.

As reported by FE earlier, the station redevelopment model is being revisited as the ‘Swiss challenge’ bidding process evoked lukewarm interest. IRSDC will now be the primary developer. The revamped public-private partnership model is expected to offer more attractive terms for private investors with longer lease period of 99 years as against the current 45 years, residential premises being part of the assets created and multiple sub-leases being allowed rather than just one. The Swiss challenge method allows unsolicited offer being made by an original proponent ensuring the best process (in terms of cost and time efficiency). Then, third parties make better offers (challenges) with the original proponent getting the right to match any superior offers.

Under the new proposal, any PSU — Ircon International, Housing and Urban Development Corporation, Rail Vikas Nigam, NBCC (India), Delhi Metro Rail Corporation — which has expertise in the field can be given the work in association with Rail Land Development Authority (RLDA). The transporter is looking for an exemption from the provision that stipulates that PSUs can’t be given projects on a nomination basis under the general finance rules (GFR). “We are looking for an exemption for expert (PSU) companies,” added the official. RLDA is empowered to identify portions of the transporter’s vacant land viable for commercial exploitation.

The exemption has been sought keeping in mind the case in which IRSDC is unable to generate enough bandwidth for all stations, apart from maintaining a healthy competition; the Railway Board will only intervene for stations in which IRSDC is not interested. In case of nomination, the railways will decide the percentage of project cost as expenses, and depending on whichever PSU is ready, the price point will be awarded projects. “The way we give out projects is that, say, 8.5% of the cost is given for staff cost, overhead expenses and profits, if at all to be made,” said the official. So for instance, if a project is awarded at Rs 100 crore, Rs 92.5 crore will be the cost and the rest will be the PSU’s expense. The GFR states there should be competition among PSUs on a service charge basis. Once the percentage of service charge is fixed, PSUs can compete among themselves.

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