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| Railways draft policy to encourage pvt investment |
| Sharmistha Mukherjee / New Delhi Apr 13, 2010, 00:52 IST |
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The railway ministry has launched a major initiative to encourage private investments in infrastructure projects. A detailed policy has been drafted in this regard.
A senior ministry official said, “Due to a resource crunch in the railways, we are looking at alternative sources of funding for developing infrastructure projects. We are going to hold discussions on the draft policies with the Chambers of Commerce and Industry on Saturday to gauge the response of private players on such initiatives.”
The draft policy deals with constructing railway tracks, developing private freight terminals, automobile and ancillary hubs and private operation of special freight trains on the network.
To increase rail share in freight traffic, for instance, the ministry has evolved a policy to build rail connectivity projects spanning over 20 km with private sector participation. The minimum rate of return for such projects has been determined at 14 per cent.
One of the models being considered is the ‘cost-sharing freight rebate scheme’ under which the private players will share the cost of developing the new line and get a discount of 10-12 per cent on incremental traffic transported on the network. Besides, new lines can also be constructed under ‘full contribution apportioned earning mode’, SPV model and private line model.
“In the full contribution model the private entity in the project will finance the building of the rail link, and in return receive apportioned earnings for a period of 25 years,” said the official.
To increase the modal share of railways in automobile transportation, the ministry had announced the setting up of 10 auto hubs at Santragachi, Shalimar, Siliguri, Ranchi, Guwahati, Patna and Hosur among other places last November. The proposed policy says railways will make surplus land available to private players on license for a period of three years, to be extended every year thereafter. The private party in turn will be responsible for setting up facilities on the land.
Another official said, “Private players can recover costs by charging automobile customers for the services at the hub. However, the hub has to be built and made operational within a year of handing over of the land otherwise the license will be made null.” The hubs will not only serve as centres for transport of auto traffic, but also house aggregation facilities and serve as distribution points to immediate catchment areas.
Railways expects to earn around Rs 1000 crore per annum from the automobile hubs, he added. At present less than two per cent of automobiles manufactured in the country are transported through the railways. The railway hopes to increase such traffic to 15 per cent by 2015-16.
Similarly, for freight traffic the railways plans to provide integrated logistics solutions by engaging private players in developing and operating freight terminals. The operators can use the terminals for 20 years. The licence can be extended by another 10 years.
The terminal management company (TMC) will have to pay freight charges to the railways but can charge for value-added services from customers. The TMC can handle the bookings and delivery for all commodities except outbound coal, coke and iron ore.
The draft policy also has a ‘special freight train operation’ scheme that would allow private operators to invest in wagons and use the railway network for a period of 20 years. They can charge consumers for the services they offer.
Private investment in railways projects were mooted to be around 19 per cent between 2007-12. Till date, only Rs 2000 crore has been reliased from the sector against a target of over Rs 50000 crore.
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