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Railways unveils draft policy on pvt investment

Railways unveils draft policy on pvt investment
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First Published: Fri, Apr 09 2010. 09 37 PM IST
Updated: Fri, Apr 09 2010. 09 37 PM IST
New Delhi: The Indian Railways on Friday unveiled a draft policy allowing private firms, including port operators and cement and steel makers, to build railway tracks and earn revenue from freight charges.
The national transporter also released draft guidelines for private companies building freight terminals and auto hubs on private land.
Railway minister Mamata Banerjee said in the run up to the railway budget that a policy allowing private investment in railways tracks was being considered.
A policy on privately held railway lines was released in 2008 but found no takers because of restrictions on the extent of returns on investment, railway officials said on condition of anonymity.
The revised policy offers four business models to potential investors—a cost sharing model, where the developer gets rebate on freight; a full contribution model, where the developer finances the entire cost of the project; a special purpose vehicle model where the railways and the developer hold stake in the project; and a private line model where the developer acquires his own land and connects the rail line to the existing railway network.
Under the cost sharing model, the railways acquires land for the project, but at the developer’s expense, and ownership of the project remains with the state-owned transporter.
The developers would be entitled to receive earnings from the lines for periods ranging from 25 to 30 years depending on the business model. However, the policy would not apply to coal and iron ore mines, which represent the bulk of the railways’ freight revenues.
“We are doing this in areas where traffic is likely to go away (to other modes of transport like road),” said a railway official. Only those lines in excess of 20km or more would be considered under the policy
The national transporter had already had one round of consultations with the industry in mid-March and another consultation was scheduled for 17 April, the official said, declining to be named.
The private freight terminal policy allows for handling all kinds of freight except coal, coke and iron ore. Operators would have to share a percentage of their revenues with the railways.
rahul.c@livemint.com
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First Published: Fri, Apr 09 2010. 09 37 PM IST