Cabinet nod for joint venture companies between states, railways

The cabinet on Wednesday gave its approval to allow the Railways Ministry to form joint venture (JV) companies with the state governments to mobilize resources for undertaking various rail infrastructure projects in states, an official statement said here.

"The joint venture companies would be formed with equity participation of Ministry of Railways and state governments concerned. Each joint venture would have an initial paid up capital of Rs.100 crore based on the quantum of projects to be undertaken," the statement said.

The union cabinet meeting was held under the chairmanship of Prime Minister Narendra Modi.

"The Ministry of Railways' initial paid-up capital will be limited to Rs.50 crore for each state. Further infusion of fund or equity for the purpose of the projects shall be done after approval of the project and its funding at the level of appropriate competent authority," it said.

The JV can also form project-specific special purpose vehicle with equity holding by other shareholders like banks, ports, public sector undertakings and mining companies.

The statement said the JV exercise would ensure greater participation of state governments in implementation of railway projects both in terms of financial participation as well as decision making process.

"This will also facilitate in faster statutory approvals and land acquisition. Besides travelling people, various cement, steel, power plants etc. would get the necessary rail link for transportation of their raw material and finished products," it added.