PPP projects could be brought under proposed rail regulator's ambit

Seven PPP projects of Rs 5,693 cr are under implementation as part of a joint venture model

Rail minister Suresh Prabhakar Prabhu plans to bring public private partnership (PPP) projects under the ambit of the proposed regulator for the rail sector. The idea is to turn around Indian Railways’ unsuccessful experience with PPP projects as part of larger reforms to boost investments through private participation.

Prabhu told Business Standard  that he would soon approach Parliament with the draft of the regulatory authority Bill seeking a debate on the controversial provision. “The three key elements of the regulator’s functions will be the framework and monitoring of passenger and freight tariffs, PPP and efficiency.”

The minister, who completed a year in office last month, clarified the regulator would not set tariffs but provide the framework for tariff setting with a view to improve efficiency and give final approval. “We are creating the regulator to tackle the issue of cross-subsidisation. The draft is ready and we will get it passed in Parliament soon,” he said.



The proposal is being finalised at a time the railways is struggling to cut down costs in the wake of falling freight volumes and the impact of the seventh pay commission recommendations. “It is easy to say we want to raise passenger fares and freight rates because of the pay commission impact. But would it be fair? Therefore, I am putting efficiency as a part of the regulator proposal,” Prabhu said.

According to officials, Indian Railways has undertaken 20 projects worth Rs 14,000 crore in the current Plan period including new lines, doubling and electrification projects on the PPP mode. While seven PPP projects of Rs 5,693 crore are under implementation as part of a joint venture model, an additional Rs 2,236 crore worth of projects are being executed through the customer-funded model. Also, three PPP projects worth Rs 3,016 crore are being implemented through the annuity route and in-principle approval has been given to six others worth Rs 3,078 crore. These models are part of the participatory policy for rail connectivity launched in 2012.

The rail ministry had recently awarded two locomotives projects involving around Rs 36,000 crore investments in Bihar to foreign firms – US-based GE and French firm Alstom.

The two PPP projects will start delivering high-horse power diesel and electric locomotives after 2018. Also, the ministry has announced plans to redevelop 400 stations through the PPP mode.

Prabhu had announced an investment plan of Rs 1 lakh crore for the current financial year in this year’s Budget including Rs 40,000 crore of the gross budgetary support or the Centre’s financial assistance, Rs 17,655 crore of market borrowings, Rs 17,793 crore of internal resource generation and Rs 5,781 crore to be raised through PPP.