Odisha open to SPV with Railways ministry

While state govt will hold 51% equity in the proposed rail SPV, the Railways ministry will have the balance 49% stake

Odisha has given its consent to the Railways ministry's proposal to form special purpose vehicle (SPV) where both the ministry and the state government will have equity participation. While the state government will hold 51 per cent equity in the proposed rail SPV, the Railways ministry will have the balance 49 per cent stake.

"On January 8, we have given our consent to the Railways ministry for forming the rail SPV. Our government will have 51 per cent in the SPV and the rest 49 per cent stake will be that of Railways ministry," said state transport minister Ramesh Majhi.

"The Railways ministry had sent proposals to all states for formation of SPVs. Odisha is the first state to have given its consent for the SPV. After receipt of responses from all states, the matter will go to the Union Cabinet. As per the plan, the profit made from all new railway lines will go to the SPV and this will help expedite pending rail projects. Since there are fund constraints in the Railways, we are not getting adequate funds for our projects," said Sanjay Mohapatra, commissioner (rail coordination) and special secretary, commerce & transport, Odisha.

The state chief secretary G C Pati in a letter to the Railway Board, while welcoming the proposal of the rail SPV, has suggested that the rail SPV may explore the possibility of taking up works like development of port infrastructure and its connectivity with approval of the government.

"The SPV will conduct techno-economic survey to assess the requirement of railway infrastructure for unconnected backward areas, requirement of industries, ports and mining areas. The SPV may acquire land required for the railway projects in advance and some railway projects can be implemented on the PPP (public private partnership) mode as per guidelines of the Government of India and the state government. The SPV may execute the projects by selecting suitable agencies. On completion of the projects, Railways would operate these services, fix tariff, collect all revenues and maintain the assets", the chief secretary's letter stated.

Last month, Railways minister Suresh Prabhu had urged chief minister Naveen Patnaik to give consent to forming SPV to raise funds for development of rail network in the state.

"The Ministry has a large shelf of sanctioned rail infrastructure projects the implementation of which is affected due to fund constraints. As worked out on April 1 2014, the balance liability of already sanctioned new lines, gauge conversion and doubling works works out at Rs 1.82 lakh crore. Added to this is the additional liability caused because of new Land Acquisition Act. The net liability at 2014-15 level is estimated to be approximately Rs 2.8 lakh crore. In 2014-15, only Rs 15,000 crore could be allocated for these projects", Prabhu stated in his letter.