Railway station’s revamp runs into procedural hitches

Railway station’s revamp runs into procedural hitches
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First Published: Fri, Jan 16 2009. 12 58 AM IST
Updated: Fri, Jan 16 2009. 12 58 AM IST
New Delhi: Even as the country’s top planning body sews up a model agreement that will govern railway station concessions, plans for the first station to be handed over to private developers remain mired in procedural delays, with a railway official saying the bid deadline for the project is likely to be extended from 20 January.
The latest delay in the Rs6,000 crore project to modernize the New Delhi railway station, which has been in the works for several months now, stems from concern that commercial development work would impede traffic management in the heart of the city, according to the railway official who did not want to be named.
The New Delhi railway station, which handles an average 350,000 passengers and 276 trains a day, is built on 87ha of prime land in Delhi’s central business district. It is the first of 22 stations the railways eventually planned to hand over to private partners. The railways proposes to raise at least Rs1 trillion of the Rs2.5 trillion it needs over the next five years from public-private partnerships (PPP).
The original deadline for the first of a two-stage bid process was 5 September. Since then, bids have been delayed for a variety of reasons, including the addition of a technical bid stage.
Concerns over the extent of cross-holding between some of the 13 consortiums bidding for the project have also hindered the process, requiring the railways to seek a clarification from the finance ministry, the same railways official said.
“We have just written to the cabinet secretary to sort out the matter,” the official said.
Traffic jitters
Another hurdle was securing clearances from Delhi government agencies that weren’t coming through because of worries over how the project could affect traffic management plans in the central business district during the 2010 Commonwealth Games.
A Planning Commission official said the concern stemmed from an improper understanding of the commercial aspect of the project. Commercial development of prime land is seen as a way of financing and cross-subsidizing capital-intensive infrastructure projects. However, the Planning Commission official said, private developers should only be allowed commercial exploitation to the extent of the cost of the project. “There are fears that commercial development will lead to extra traffic,” said the official, who also did not want to be identified. “We are not very clear what is happening. I don’t get enough confidence from the way it is being handled,” the official said about the way the bid process was being conducted and the repeated delays. “We have drafted a concession agreement for the railway station.”
Model agreement
The Planning Commission has also held a “consultative meeting” with potential bidders this week in developing the model concession agreement (MCA). A draft agreement has already been prepared and the MCA is expected to be in place within a month, the official said
While some bidders expressed little hope of the project going ahead before March, analysts cited the possibility of the general election further affecting the project. Elections are due to take place by May.
“Once you have gotten into elections, then nobody would dare bid for the project,” said Siddhartha Das, national PPP practice leader for consulting firm Ernst and Young Pvt. Ltd. While the government can technically continue bidding for projects that have been announced in the past, in practice projects are rarely awarded after elections have been called, Das said.
Some potential bidders, meanwhile, say there is little chance of any progress before March at least.
“This will go (get extended) till March. They (government) have asked for a guarantee of Rs1 crore. Why will any concessionaire put any money till the MCA is finished?” said an executive with one of the companies in line to bid for the project. “And the MCA will take some more time. Then the railways also have to accept it,” said the executive, who didn’t want to be named because he isn’t authorized to speak to the media.
rahul.c@livemint.com
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First Published: Fri, Jan 16 2009. 12 58 AM IST