New Rail policy for higher private sector involvement

Last Updated: Sun, Jan 08, 2012 08:27 hrs

Facing a resource constraint, Railways has come up with a new draft policy which seeks increased private participation for rail connectivity and opens the doors for foreign direct investors for expanding its network.

The cash-strapped public transporter has proposed six PPP models for project execution that include creating railway connectivity on private land and forming special purpose vehicles (SPV) for new line and gauge conversion.

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The policy has also sought to attract the state government in playing a proactive role in development and implementation of rail projects in their respective states, a senior Railway Ministry official said. He said the draft policy aims to open opportunity for returns from investment in rail projects and ensure timely availability of rail infrastructure to the beneficiaries such as port, industry and states.

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Local bodies, ports, large import and export companies, co-operative societies, infrastructure and logistics providers too have been invited for increasing the rail network.

The official said overseas corporate bodies and foreign direct investors can also participate in asset creation pending clearances by Foreign Investment Promotion Board.

"Once finalised, the policy would replace both R3i and R2Ci policies" he said, admitting these policies could not achieve the desired objectives.

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The new draft policy encapsulates creating railway connectivity on private land, forming special purpose vehicle (SPV) for new line and gauge conversion, awarding railway projects on BOT basis, customer-funded capacity augmentation and creating multi-user lines.

Railway Minister Dinesh Trivedi, participating in a discussion in Parliament in the recently concluded Winter Session had sought increased private participation for taking railways to the next generation.

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He had said the public transporter requires over Rs five lakh crore in the coming years to achieve this.

Described as the fourth largest rail network in the country, Indian Railways have been saddled with problems like delay in project execution and cost overruns. It has come in for flak from several quarters owing to tardy progress of work.

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