'Tamil Nadu's concerns not addressed in rail ministry's draft MoU for SPVs'

CM J Jayalalithaa writes to PM seeking revision of such MoUs for setting up special purpose vehicles to take up projects

The Tamil Nadu government has flagged the rail ministry’s draft MoU for creating an SPV for projects, saying that it does not address concerns raised by the state. 

"In the draft MoU (memorandum of understanding) circulated by the Ministry of Railways, these concerns are not adequately reflected. The draft MoU would require revision before it becomes acceptable to the Government of Tamil Nadu," said chief minister J Jayalalithaa, in a letter to Prime Minister Narendra Modi. 

She also asked the PM to direct the concerned officials in the ministry to engage in talks on having a fair, balanced and an acceptable draft of the MoU. 

Earlier, the rail ministry had asked states to join hands with the Centre and float a special purpose vehicle (SPV) to take up railway projects in their respective states. Tamil Nadu had agreed to form the SPV for the same.

“We had also indicated some specific conditions for the establishment of the SPV," said the Chief Minister.

Since the land is typically provided by the state government, this should be treated as part of the state government's equity contribution to the SPV at market value. Matching equity contributions from the Ministry of Railways could be in cash or in the form of land owned by the Railways or other Central Government departments, the minister said.

In case of equity contributions in cash, there should be assurances that these contributions by both sides would be made in time to ensure that projects do not suffer delays due to lack of adequate funding, the letter said.

The governance structure should be well-balanced, with adequate participation by the state government, she said.

The state has three projects for implementation. These include Chennai - Thoothukudi freight corridor, high speed passenger rail link — Chennai-Madurai-Kanniyakumari and high speed passenger rail link — Madurai to Coimbatore.

Given the importance of these three projects, the state government had already indicated that it would be willing in-principle to enter into an MoU with the Indian Railways to set up an SPV to promote these projects, which are also part of the Madurai Thoothukudi Industrial Corridor, the letter said.

She also said that a number of railway projects announced for Tamil Nadu in the earlier Railway Budgets have not been commenced so far due to want of sufficient fund allocations. She also listed 20 projects in the letter and asked the Centre to expedite them and allocate sufficient funds in the Budget for completion of the projects early.

"The Railway Budget for 2016-17 is to be presented shortly. Tamil Nadu has certain specific proposals and suggestions for the Railway Budget which I am sure you would be able to consider positively," said the Chief Minister.