Private investment in railways gets Cabinet nod

Desperate to attract private investment in railways, the Cabinet on Thursday cleared the transporter’s plan to rope in the private sector for building new rail lines and plants and augment capacity, a move that was red-flagged by unions. With the policy in place, the railways will be able to get the private sector to connect ports, mines and industrial plants with the railway network by allowing them to invest in laying the tracks for last-mile connectivity. The move is expected to lower transportation cost and help move minerals, coal and finished products from production hubs. Similarly, wherever the private sector thinks putting up a third or a fourth line is feasible, the government can enter into a build-operatetransfer arrangement. The move comes as the railways, in the absence of fare increase, has failed to generate resources for funding modernization, leave alone capacity addition, despite successive railway ministers adding new trains to appease their constituency. ‘Model pacts to be finalized soon’

The railways had earlier suggested that connectivity to ports and mines would be developed by the owner or concessionaire as private railway lines by acquiring land and making investments in it which could be declared non-government railway (NGR) for public carriage of goods.

The government, however, said the model agreements for private participation — ranging from NGR to BOT, joint ventures and capacity augmentation via funding by customers — will be finalized soon.
Although the Cabinet cleared the proposal on Thursday, the government will need to get the bureaucracy on board as it has repeatedly blocked any attempt by the private sector to get a foothold. For instance, the move to allow private container operators has proved to be a nonstarter as the railways decided to give public sector player Concor priority.

Similarly, Lalu Prasad’s plans for PPP locomotive factories in Marhaura and Madhepura, both in Bihar, are yet to take off despite interest from companies such as GE.
Even this time, the unions are opposing any attempt to hand over operation and maintenance to private players, which could deter investors looking to enter the BOT space for building new lines. Citing poor finances, they are, however,not opposed to letting private players invest in infrastructure development, indicating that they are on board for an EPC-like arrangement where the private sector only builds projects, and invests in it.

“We don’t have any problem with private sector participation in infrastructure development. But we’ll oppose if the railways tries to hand over operation and maintenance to private companies,” said Shiv Gopal Misra, general secretary, All-India Railwaymen Federation.

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