New Delhi: The decision by the Indian Railways to outsource land monetization and re-development of 10 stations to the National Buildings Construction Corporation (NBCC) has started yielding results. Within a year, NBCC has initiated work on Gomti Nagar railway station at Lucknow and is looking to add four more stations by the fiscal end. In an interview, NBCC chairman and managing director Anoop Kumar Mittal talks about the project. Edited excerpts:
Station re-development is a very new concept for India. How did you get the project?
In June 2017, we were asked by Indian Railways to re-develop a few railway stations through land monetization for them. The project seemed very interesting and promising. So we decided to take 10 railway stations to begin with: two in Lucknow—Gomti Nagar and Charbagh—Tirupati, Puducherry, Nellore, Ernakulam, Madgaon, Kota, Sarai Rohilla (in Delhi) and Thane.
Railways had offered us hundreds of stations but we chose low hanging fruit so that we can show results and people get interested and attracted.
What is the status of the project?
Work on the Gomti Nagar station in Lucknow has started and is in full swing while Charbagh is expected to start in a month’s time. For remaining stations detailed project reports are ready. In the next six months we plan to start minimum three more stations so that by end of this fiscal work on five stations is in place. The targets are Tirupati, Goa and Puducherry apart from the two in Lucknow.
What kind of revenue potential do you see?
Redevelopment of stations shall be done on self-sustainable finance model by commercial exploitation of vacant railway land parcels that are given to us. The revenue generated from commercial exploitation of space shall be used for both station and other commercial developments. The total project cost for these 10 stations would be around ₹ 4,000 crore and expected revenue will be around ₹ 5,000 crore. These are just initial estimates and they can go even higher.
Railways were asking us to take more stations, but we said let us complete a few stations first and showcase our capabilities. After March 2019, NBCC will take a call on including more stations in its inventory.
What kind of financial arrangement is between Indian Railways and NBCC for the project?
Terms and conditions are very clear. Whatever money is earned from the commercial exploitation of the project we will deduct the station re-development and real estate construction costs and whatever is left will go to the Indian Railways. We are project management consultants and will get our agency charges fees which are in range of 8-10% of total project cost. Under the arrangement, NBCC will sell the commercial property on 90-year lease to the public but the land ownership will remain with railways. As far as investment is concerned, NBCC is going to give 5% of project cost as initial seed money and will get interest @12% upon.
Do you think Indian Railways should outsource station re-development to external agencies?
I won’t comment on it if NBCC is equipped better to do the work then railways or not. But definitely the kind of model we adopt everywhere that is the best model. We are clear with our vision that is we need to construct and sell. We believe in two separate entities.
What kind of vision does NBCC has for station re-development?
These stations will be world-class like airports. There will be complete segregation for arrival and departure of passengers from trains just like you have for airports. The station building will be provided with an iconic structure, congestion free non-conflicting entry and exit to the station premises. Besides, differently-able friendly, facilities like retail shops, wash rooms, cloak rooms, food courts etc will be available along with ATMs and pharmacy. Besides land to be monetized will have residential buildings, shopping complexes, etc. Whatever plans we are preparing for stations are approved by Railways first.