Rail PPP projects move at a snail's pace

Most of the projects face hurdles such as delay in approvals and lack of coordination between state governments and the railways

When a steering committee headed by the principal secretary to the prime minister meets on Friday regarding public-private partnership (PPP) projects in the infrastructure sector, it will be faced by a backlog of 350 in the railways alone, requiring funding of at least Rs 2 lakh crore.

The Prime Minister's Office (PMO) has formed a group comprising the chairman of the Railway Board, the finance secretary and the secretary to the Planning Commission, among others, to come up with 'creative financing-cum-implementation mechanisms' to clear the backlog. Arunendra Kumar, chairman of the Railway Board, had earlier told Business Standard the railways had decided to prioritise whatever "needed to be completed within the available resources".

The Elevated Rail Corridor (ELC) in Mumbai, redevelopment of stations, power generation and energy savings projects, coal mines and port connectivity were identified as areas of priority for the 12th Plan. There were also ambitious proposals such as a high-speed bullet train corridor between Mumbai and Ahmedabad, set for a feasibility study in 2009 and still to see any development. Station modernisation is yet to attract many of the investments mentioned in the Budget of 2013. (INDIAN RAILWAYS CONNECTIVITY PROJECTS)

The ELC is still shuttling in files between various ministries. Four extensions have already been taken for the Request For Proposal process. The project is 'still under discussion' even after intervention from the PMO.

Indian Railways (IR) has limited resources to meet its backlog. It has funding of Rs 26,000 crore from the central government, internal resources of about Rs 14,000 crore and this year it is expected to raise Rs 6,000 crore through PPP. To clear the backlog of 350 projects, experts say it would take at least Rs 2 lakh crore. The PPP target for the 11th five-year plan (2007-12) was Rs 66,000 crore, compared to the 12th Plan target of Rs 1 lakh crore. In the 11th Plan, the railways could achieve just four per cent of their set target.

Although coal and port connectivity projects have breathed some fresh air, they are still far away from any momentum. Port connectivity projects worth Rs 3,800 crore have attracted private investors. Six projects - Astranga, Dighi, Jaigarh, Dhamra and Rewas - have got a nod from the railways ministry. Hazira port has recently approached IR and is yet to receive a nod. The approved five projects are undergoing private studies for feasibility. "It is not yet clear when the concessionaires would be exchanged and by the current pace of development, most conservative figures indicate it will take a little more than two years for the studies to be completed and a further plan to be chalked out," added a source from Rail Bhavan.

Projects where some movement is expected by December are the two locomotive factory projects at Madhepura and Marhowra, both in Bihar. The two projects were announced by Lalu Prasad in 2006 during his tenure as minister.

They were to be set up in partnership with private entities, with the railways holding 26 per cent stake in each. These have yet to take off, despite the bidding process being conducted several times.