Railways Outstanding Projects Swell To Rs 35,000 Crore

Cost escalation and populist announcement of new projects have further bruised the financial position of the railways and bloated their total outstanding projects by Rs 4,000 crore to Rs 35,000 crore.

The railways need Rs 20,000 crore for laying new lines, Rs 300 crore for doubling projects, Rs 8,800 crore for gauge conversion, Rs 1,300 crore for electrification and Rs 1,500 crore for metro rail projects in New Delhi, Bangalore and Hyderabad, officials here said but did not explain the sudden increase in the figure.

The official figures for outstanding projects were Rs 31,000 crore till now, which inexplicably rose to Rs 35,000 last week.

"Most of the increase has come by way of cost escalation and some projects which were not included in the earlier estimate," a senior railways official said.

To tide over the situation, the cash-strapped ministry of railways has embarked on a slew of joint ventures with states where the state concerned would chip in with free land for rail infrastructure projects and financial institutions would shell out cash.

A memorandum of understanding (MoU) was signed with Karnataka last Wednesday to take up projects worth Rs 1,640 crore. Another MoU was signed with Andhra Pradesh in Hyderabad yesterday.

The MoU between the railways and Andhra Pradesh entails upgrading the existing infrastructure to a multimodal suburban commuter transport system in the twin cities of Hyderabad and Secunderabad on a 50:50 cost sharing basis.

A joint task force comprising officials from the railway ministry and the respective state would be set up to oversee the implementation of the project till a company with equity contribution from the two partners and private players is formed.

The task force would also appoint a consultant to prepare a feasibility and investment banking report, to be completed in 6 months, and work out details of the joint venture corporate entity, sources said.

The joint venture with Karnataka signed last week entails setting up of a corporate entity christened Rail Infrastructure Development Corporation (Karnataka) Ltd (K-RIDE) in which Karnataka and the Centre (through the railway ministry) would hold 26 per cent stake each. The rest of the equity would be offered to financial institutions and banks. Housing and Urban Development Corporation (Hudco), and Infrastructure Development Finance Corporation (IDFC) have already been invited participate in equity, they said.

K-RIDE would expedite long-pending projects including a new line between Hubli and Ankola, gauge conversion on Solapur-Gadang and Hassan-Mangalore sections, and doubling of Guntakal-Hospet line, and other projects that would be identified from time to time.

In most of these join ventures, the railway ministry would undertake the construction work of projects. They would also operate and maintain them and if required, or enable strategic partners to do this. The state government would provide land free of cost for the projects.

The projects would be completed in a time-bound manner and the net revenues would be shared between the parties in proportion of their shares in the entity. The land and air space of the railways shall also be commercially exploited to generate revenues.

This route was first adopted by the railways in the 1980s when a new railway line connecting western and eastern parts of Mumbai city was taken up with financial participation by Maharashtra government.

The experiment was further extended for the construction of the prestigious 870-km Konkan railway line connecting Maharashtra with Mangalore in coastal Karnataka. For this, a separate Konkan Railway Corporation was set up with equity participation by the railway ministry and the governments of Maharashtra, Karnataka, Kerala and Goa -- the four beneficiaries of the new line.

Even Orissa is slated to sign an MoU with railways for completion of outstanding projects in the state, the sources added.