Mumbai: Astring of Indian corporations, including the Tata group, companies of the Ambani brothers, Larsen and Toubro, DLF, GVK Group and GMR Group are rushing for a slice of Indian Railways’ project of making world-class railway stations through public-private participation.
Apart from domestic players, a few leading international firms, too, have shown interest in this project. The railways has started inviting interested firms for modernizing 22 railway stations across India.
Tata Realty and Infrastructure Ltd (a 100% subsidiary of Tata Sons), the Mukesh Ambani-controlled Reliance Industries Ltd, Anil Ambani’s Reliance-ADA Group, engineering and construction major Larsen and Toubro Ltd, India’s largest listed developer DLF Ltd, GVK Group (which runs the airport in Mumbai), GMR Group (operates the Hyderabad and New Delhi airports), infrastructure developer DS Constructions Ltd and Maytas Infra Pvt. Ltd are planning to participate in the project.
Landmark of change: The railways ministry has already appointed a consortium of business and design consultants to finalize the business plans for New Delhi railway station. (Photo: Ramesh Pathania/Mint)
Domestic players are considering the railway station projects as an extension to their existing transport, infrastructure, real estate, ports and airports businesses.
“The railway station plans are similar to airport modernization plans, though it is currently in the process of finalization. Several domestic and international companies have shown interest in this project,” said a senior Indian Railways executive, who did not want to be named.
“According to initial plans, each station will have two different terminals for passenger and cargo. To tap other income sources, these stations will have shopping malls, banks and hotels—both budget and luxury,” the executive added.
The new structure will decongest the stations, which may have three floors and a basement for parking buses and private vehicles.
“The principles of airport modernization can be applied to railway station modernization, too. There is huge potential for non-ticket-based revenues in railway stations like the concept of non-aeronautical revenues in the privately-run airports,” said G. Raghuraman, a professor at the Indian Institute of Management, Ahmedabad, who is an expert on transportation and logistics.
Raghuraman, who also authored a study on Indian Railways and its turnaround, said the public-private partnership that is mandated to run railway stations can target people visiting railway stations for receiving and sending off passenger as a potential market by offering value-added services, such as restaurants, shopping malls, and so on.
“Under the private-public partnership, the railway terminal should be a separate entity which could collect landing charges from trains like passenger service fees collected from airlines by airports. The separate entity can also impose differential landing charges on the basis of peak and non-peak hours,” Raghuraman added.
The ministry of railways has decided to develop 22 railway stations, located in metropolitan cities and major tourist centres, as world-class stations.
The ministry has already come out with a global advertisement on this project. To begin with, the ministry has appointed a consortium of business and design consultants—Hong Kong’s Terry Ferrell & Partners Ltd, the London-headquartered Ove Arup & Partners and SMEC International Pvt. Ltd of Gurgaon—to finalize the business plans for New Delhi railway station.
The consortium would submit a master plan and feasibility report by February.
Later, the mandate to develop New Delhi railway station would be given to a public-private partner consortium through competitive selection.
This player can run New Delhi station for 35 years on a design, build, finance, operate and transfer, or DBFOT, basis.
Besides New Delhi, the other 21 stations identified for development are Pune, Chhatrapati Shivaji Terminus (Mumbai), Howrah (Kolkata), Anand Vihar (Delhi), Bijwasan (Delhi), Lucknow, Amritsar, Chandigarh, Varanasi, Chennai, Thiruvananthapuram, Secunderabad, Ahmedabad, Patna, Gaya, Bhubaneswar, Mathura, Agra, Bangalore, Bhopal and Jaipur.
“We are certainly evaluating the prospects of railways station projects at metros. Getting into railway station projects is a natural extension for those who are already in businesses such as real estate development, airports and other related infrastructure,” said a Tata group executive, who did not want to be identified.
“We may be bidding only select railway stations, including New Delhi. Having a property at a place like New Delhi would not only mean making money for the company but also participating in nation building,” said Madhu Terdal, chief financial officer, corporate strategic finance, of GMR Group.
Terdal pointed out that there are similarities in executing projects such as road, airports and railway stations. “The skill set required for railways is more or less similar to other projects. We are not just looking at construction side of the business but adding value to such projects. For instance, we developed a concept of airport cities in Delhi and Hyderabad instead of just constructing terminals,” Terdal added.
That most railway stations are located in city side makes the project attractive, points out Rafi Qadar Khan, general manager, DS Constructions. “We are keen on participating in the bid for upgrading railway stations in metros and select non-metros. It gives tremendous scope as most of the railway stations are located in city side,” he said.
The Indian Railways official quoted earlier in the story said the consultant would soon come out with the feasibility and cost for developing the 22 railway stations as world-class facilities.