New Delhi: Indian Railways on Wednesday signed agreements with the governments of Kerala and Andhra Pradesh to form joint venture (JV) companies in its effort to identify railway projects and possible financing avenues. It had earlier signed such agreements with Maharashtra and Odisha.

The national carrier will hold a 49% stake in the JV companies and the rest will be held by the respective state governments. After project finance is ready, a project-specific special purpose vehicle (SPV) would be formed.

An important aspect of the pacts is that the ownership of the land would vest with the SPVs, helping it leverage its commercial potential. This is likely to make such projects more viable.

At the end of concession period, the railways will have the option to take over the assets at a nominal price.

Under the JVs, the railway ministry would sign concession agreement of 30 years with the project SPV for safe and sound operations, revenue sharing and providing technical and marketing logistics. The revenue sharing shall be based on an already established formula being used for inter-zonal apportionment of revenue.

Close