Indian Railway network is the prime infrastructural sector of the
country and in view of the fact that it is five to six times more
energy efficient, four times more efficient in land use and
significantly superior from the standpoints of environment impact
and safety, compared to other transportation options, it needs to
expand and develop in order to keep pace with the growth of Indian
economy. A massive investment is urgently required for the
development of the railway system. The budgetary support to the
railways has been increasing, but the quantum leap that the Indian
Railways is seeking to undertake, requires much more in terms of
resources.

The high growth path that the country has embarked upon under the
11th Five Year Plan, envisages that Indian Railway would need to
spend around Rs. 2,51,000 crore (US$ 62 billion) on various capacity
enhancement measures over the next 5 years. A major part of the
investment would come from internally generated resources and
Budgetary support to the extent feasible. However, to meet the
massive investment needed, these would need to be leveraged to
mobilize an adequate level of extra budgetary resources. Around Rs.
1,00,000 crore is expected to accrue from extra budgetary resources
including Public Private Partnership (PPP). PPP would, thus, play a
crucial role in the attainment of the strategic goals outlined
above.

In the past Indian Railways had made several attempts to rope in
private participation in areas such as catering, wagon ownership and
leasing and joint ventures for rail infrastructure projects. These
efforts were, however, limited in scale and scope. The current
strategy is to leverage private capital through PPPs to the maximum
extent in areas which are amenable to PPPs to improve efficiencies
and control costs.

To begin with the following projects have been identified to be
implemented fully or partly on PPP route:

Construction of Dedicated Freight Corridor

It has been planned to construct a new Dedicated Freight Corridor
(DFC), initially covering about 2700 route kms equivalent to around
5000 track kilometers with an approximate cost of Rs. 28000 crore
(US$6 billion) linking the ports of western India and the ports and
mines of Eastern India to Delhi and Punjab respectively. The
construction of this corridor will be implemented through an SPV
which has been created for the purpose through a mix of Engineering
Procurement and Construction (EPC) and PPP methods. Ministry of
Railways is in the process of selecting a global consultant to
advise on the concession agreement, principles of track access
charges and other financing and bidding issues. It is envisaged that
innovative ideas on design, construction and maintenance of railway
to achieve optimal life – cycle costs would be forthcoming through
PPP especially as the work progresses on the initial two corridors
and further corridors are taken up. The concessionaire could also
tap additional ancillary revenue streams through commercial
exploitation of land, construction of freight terminal/logistic
part/ICDs etc.

World Class Railway Stations

Railway stations at metropolitan cities and important tourist
centers need to be modernized to provide world class passenger
amenities and services to the multitude of passengers using these
stations. Indian Railway is planning to do so by attracting private
investments in the area by leveraging the land around and airspace
above the stations. The concessionaire would be expected to
construct and maintain the operational and passenger areas free of
cost, share the revenue earned from the real-estate created and hand
over the same after the expiry of the concessional period.
Altogether 24 stations have been identified in the first stage.
These are CST Mumbai (Carnac Bunder), Pune, Howrah (Kolkata),
Lucknow, New Delhi, Anand Vihar and Bijwasan at Delhi, Amritsar,
Chandigarh, Varanasi, Chennai, Thiruvananthapuram, Secunderabad,
Ahmedabad, Patna, Bhubaneshwar, Mathura, Agra, Gaya, Jaipur, Nagpur,
Tirupati, Bangalore and Bhopal. Pre-qualification process for
bidders for the pilot project for New Delhi Station has been
initiated. Redevelopment of Patna, Secunderabad and Mumbai will also
be taken up during the current year. Development of other stations
and green field passenger terminals would be taken up subsequently.

Commercial Utilization of Vacant Land

Indian Railways has approximately 43,000 hectares of vacant land.
These are mostly situated alongside tracks in longitudinal strips,
around railway stations, and in railway colonies especially in metro
and other important cities/towns with the potential of being used
commercially to generate revenue as well as capital for
modernization and capacity addition. A new body, namely, Rail Land
Development Authority (RLDA) has been set up under the Railway
(Amendment) Act 2005 to pursue, inter alia, the main objectives of
generating revenue and up grading railway assets. 110 sites have
already been entrusted to RLDA.

Manufacturing of locomotives/coaches/wagons Units

With sustained economic growth and the resultant demand for rail
transport, the requirement of rolling stock has increased manifold.
The requirement of coaches/Electrical Multiple Units is projected at
22689 vehicle units for the XIth Five Year Plan. The gap between the
requirement and the combined capacity of the two Production Units at
Integral Coach Factory, Perambur and Rail Coach Factory, Kapurthala
(around 2500 per annum) is planned to be bridged by augmenting the
existing capacity of these Production Units and setting up a new
manufacturing unit through a Joint Venture under PPP.

Similarly, the requirement of Electric and Diesel Locomotives has
been projected at 1800 each during the 11th Five Year Plan i.e. 360
locos per year. The existing in –house capacity for the manufacture
of these locomotives is presently 150 per annum and can be augmented
to 200 locos each per annum for Electric and Diesel locos. The gap
between the requirement and capacity in this case too, is planned to
be bridged by setting up two locomotive manufacturing units, one
each for diesel and electric locomotives, through PPP. The
possibility of PPP through long-term demand guarantee to prospective
manufactures of modern wagons is also being explored.

The new wagon investment scheme is another means of attracting
private investment in building railway infrastructure under the PPP
initiative.

High Speed Corridors

Pre-feasibility studies are being awarded for a few identified
corridors to examine the linking of a few of our bustling
metropolises with high speed rail links to facilitate train travel
over a distance of 600-1000 km within 2.5 to 4 hours. All options
including PPP will be explored towards this end.

Operation of Container Trains and Construction of Multi-modal
Logistics Parks

Private operators have been allowed to manage rail-borne Container
Services on Indian Railways. Concession agreement setting out the
terms of such operation has been signed with 15 private operators.
The scheme is also open for other operators to join. So far private
operators have inducted 45 rakes and built 3 ICDs at Garihassru,
Patli and Loni.

Policy framework to facilitate setting up of Multi-modal Logistics
Parks (MLPs) in SEZs or private land with rail connectivity has been
formulated. The policy also envisages utilization of surplus railway
land available at suitable locations for development of MLPs and/or
bulk or dedicated freight terminals.

Port Connectivity

RVNL has been mandated to undertake capacity augmentation works and
port connectivity projects by establishing Special Purpose Vehicles
(SPVs). Some of the projects taken up or under consideration of RVNL
include Palanpur –Gandhidham gauge conversion project (linking
Kandla and Mundhra Ports to North India), Haridaspur – Paradeep New
Line (linking iron ore mines of Orissa and Jharkhand to Paradeep
port), Anugul-Sukinda (linking iron-ore and coal-belts of Orissa),
Obulavaripalli-Krishnapatnam Port of Andhra Pradesh, Bharuch-Dahej
and Surat-Hazira projects in the State of Gujarat and Penn-Rewas
Port link (Maharashtsa).

Budget Hotels and Food Plazas

Indian Railway Catering and Tourism Corporation (IRCTC) has been
mandated to develop catering services, budget hotels and food plazas
at major stations through involvement of private entrepreneurs.

IRCTC is commissioning new Food Plazas in Railway premises with
private participation. The license period for food plazas is of nine
years with a provision of extension for another three years. Already
53 such Food Plazas have been commissioned.

Indian Railways is also in the process of carrying out an
examination of the scope of need-based `base kitchens'
and `launderettes' with public private partnership to strengthen the
infrastructure for on-board services. Call Centers are also being
planned under PPP by IRCTC to cater to the need for information
dissemination to the railway customers.

Indian Railways is also planning to launch new services for the
luxury tourism segment on the pattern of `Palace on Wheel' in
partnership with other interested State Governments.

The above mentioned list of initiatives is not exhaustive. This is
but a glimpse into the array of such activities planned by the
Railways that seek to place the efforts of the Indian Railways on a
more sound footing in its quest for a world class infrastructure.
Such efforts carry the potential of paving the way for the giant
leap that this organization has been gearing up for over the past
few years. The PPP route has well and truly opened up new vistas of
growth opportunities for the Indian Railways.

K.C.Jena
*Chairman, Railway Board

http://pib.nic.in/release/release.asp?relid=41181&kwd=

Indian Railways – New Vistas of Growth