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Tamil Nadu govt 'open' to float SPV with Indian Railways

State administration says it would bring land and that could be treated as equity for rail projects

BS Reporter  |  Chennai 

Tamil Nadu government has expressed its willingness to enter into an MOU with the Ministry of Railways to set up a Special Purpose Vehicle (SPV) to promote railway projects in the State. The state administration said that since the land will be allocated by the State government, this should be treated as part of the State government's equity contribution to the SPV at market value.

Recently Suresh Prabhakar Prabhu, Union Minister for Railways has asked the States to come forward to partner with the Indian Railways to form SPVs for raising funds for the development of the rail network in the State.

In a reply to this, Tamil Nadu Chief Minister O Pannerselvam said three of the trunk infrastructure projects proposed under the Madurai Thoothukudi Industrial Corridor are railway projects - the Chennai-Thoothukudi freight corridor, Chennai-Madurai-Kanniyakumari high speed passenger link and Coimbatore-Madurai high speed passenger link.

The State had already proposed implementing these projects in the Public Private Partnership mode through an SPV of Indian Railways and government of Tamil Nadu.

"Hence, the government of Tamil Nadu would be willing in principle to enter into an MOU to set up an SPV to promote these three railway projects proposed in the Madurai Thoothukudi Industrial Corridor," said the Chief Minister in a letter to the Union Railway Minister.

He added, since the land is provided by the State government, it should be treated as part of the State government's equity contribution to the SPV at market value.

The Chief Minister also said 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. Read our full coverage on Union Budget In the 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 governance structure should be well-balanced, with adequate participation by the State government, said the Chief Minister.

He also listed ten crucial Railway Projects costing around Rs 1,88,400 crore in his letter and requested the Minister to consider in the upcoming Railway .

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First Published: Fri, February 06 2015. 13:00 IST