The cash-strapped Indian Railways is planning annuity-based public-private partnership (PPP) for its route-electrification projects. Under this model, Railways will pay the contractors in annual instalments. In the 12th Plan, the railways has set a target of electrification of 6,500-km route and it hopes to exceed the target with the annuity-based PPP route.
“Route electrification could be the most successful railways PPP project as we’ll save a lot on fuel bill. At present, running on diesel is three times costlier than electric route. So, whatever we save on the fuel can be paid to contractors annually,” Railway Board member electrical Kul Bhushan told FE.
Railways feels such projects have good traction and returns on investments are faster which will interest foreign technology giants. Railways is expecting companies such as Alstom, Siemens and KEC among others to invest in the PPP.
“Best thing about this model is that suppose we save R80 crore on fuel every after electrification of 400 km, we’ll pay that amount to the contractor every year for six years. This way we’ll get our route electrified without spending anything on it and the contractor will also get good return,” Kul Bhushan added.
In the current five-year plan, Railways has a PPP target of around R1 lakh crore. Although its PPP record has not been very encouraging as other than port connectivity projects, no other big-ticket railway projects on PPP have taken off. The cost of electrification comes out to be around R1 crore for every km. At present, Indian Railways has electrified network of just 24,000 km of the total 64,000 km. Railways has a fleet of around 4,500-diesel locomotives and the same number of electric locos. Railway has an overall fuel bill of Rs 21,000 crore.