Rlys to study feasibility of running bullet trains

India’s bullet train dream has moved a step closer. The Mumbai-Ahmedabad corridor is expected to be the country’s first high-speed route as railways has given the green signal for a detailed study to explore the possibility of running trains at 300 km per hour.

The national transporter is expected to sign an MoU with Japan International Cooperation Agency (JICA) which will conduct the feasibility study for the corridor.

France and Japan are competing for the project. While RITES and Systra, a French firm, had carried out the pre-feasibility study of the route, the Japanese study is expected to be more detailed.

The study will be completed in 18 months and the cost will be shared by railways and JICA. The funding pattern, alignment, patronage, possible halts, fare structure and other details of the project would be examined.

The 534-km Mumbai-Ahmedabad route is expected to cost Rs 63,000 crore. Considered a key infrastructure project, the PMO is monitoring the project and has asked railways to constitute a project steering group to examine options for executing it. It is likely to be executed on PPP model where governments of Maharashtra and Gujarat are expected to be stakeholders along with railways.

Railways has identified six routes for pre-feasibility study for high speed corridors including Delhi-Agra-Patna, Howrah-Haldia, Chennai-Bangalore-Thiruvananthapuram and Delhi-Amritsar. TNN


Railways’ coalition ventures

PPPs or Pubic Private Partnerships, being touted by the Planning Commission as the way to go for all kinds of projects, is what had helped the British build over 40,000 miles (64,000 km) of rail network in the Indian sub-continent by the turn of the 20th century.

A 5 per cent return on investment and free land guaranteed by the then government in power was incentive enough for scores of private companies incorporated in Britain to scramble for building rail lines.

These lines were mostly from major ports like Bombay (now Mumbai), Calcutta (now Kolkata) Madras (now Chennai) and Karachi into the vast hinterland.

Simultaneously, tracks were built from Lahore and Delhi to connect the all important north frontier border post of Peshawar to the then seat of power viz. Calcutta. From just under 3,200 km, the route length increased to over 40,000 km by 1902, providing the general public a means of fast and cheap transport across the Indian subcontinent. More importantly, it helped the British move troops to keep tabs on the restless natives!

EIR (East Indian Raillways) with headquarters in Calcutta; GIPR (Great Indian Peninsula Railway) based in Bombay; North Western Railway based in Lahore; M&SM Railway (Madras & Southern Marhatta Railway) in Madras; and BB&CI (Bombay Baroda & Central India Railway) based in Mumbai were some of the major companies that came into being and ran the vast rail network. In the 1950s, these, along with scores of State-owned and private entities got re-organised into 6 zonal railway divisions, which later increased to 9 and now 17.

Post independence, it was perhaps George Fernandes who resorted to the joint-venture route to finance a railway project ~ the 720 km-long Konkan Railway that connected Mangalore to Mumbai via Roha, bringing the West coast into the national mainstream.

As the Minister for Railways in 1989-90, he met the Chief Ministers of Maharashtra, Goa, and Karnataka, all from varied political parties, successfully cajoling them to participate in the proposed equity in proportion to the length of the line that passed through their respective territories, and would ultimately help expedite their economic growth.

He even roped in Kerala, though the line ended at Mangalore, just short of Kerala’s border. The clinching argument was that it would shorten, by almost one-third, the arduous journey from the state to Mumbai via Arkonam junction.

Targeted for completion by October 1994, the initial equity capital of KRC (Konkan Railway Corporation) of Rs 250 crore was shared between the Ministry of Railways (51 per cent) and the four beneficiary states ~ Maharashtra (22 per cent), Karnataka (15 per cent), Goa and Kerala (6 per cent each).

Selection of E Shreedharan as the chairman-cum-managing director of the ambitious project was a wise choice that may be credited to Fernandes. As former Member-Engineering, Railway Board, Shreedharan not only brought with him years of experience in railways and civil engineering, but also a team of dedicated officers and supervisors who could be relied upon to work as a cohesive team.

By 2001, the Railways had realised that it would never be able to generate enough funds to keep pace with the demands for new over bridges, level crossings, lines, gauge conversion and doubling, among other things; hence, states were roped in a la KRC.

Going half-way was an option which states were willing to adopt and soon this became the norm for all projects, even those that had already been sanctioned and were in the pipeline, but work had not been taken up for paucity of funds.

Some of the major projects that ultimately came to be executed under this route are: conversion of the 275 km-long meter gauge Surendranagar-Bhavnagar line to broad gauge through a joint-venture between the Railways and Gujarat through the creation of PRCL (Pipavav Rail Corporation Ltd); conversion of 183 km of metre to broad gauge from Hasan to Mangalore through HMRDC Ltd (Hassan Mangalore Rail Development Corporation).

New Mangalore Port Trust (NMPT) and Mineral Enterprises Ltd (MEL) also participated in HMRDC as strategic partners, along with Rail Infrastructure Development Company (Karnataka) Ltd. (K-RIDE); HMRDC was also granted rights to carry on the business of development, establishment, financing, construction, operations, maintenance and management of the Hasan-Mangalore railway link for 32 years, providing an opportunity for stake-holders to make it a profitable and successful venture.

Gauge conversion for the 301 km-long Gandidham-Palanpur line was done by Kutch Railway Corporation Ltd (KRCL) in collaboration with Western Railway, the government of Gujarat, KPT (Kutch Port Trust) and MPSEZ (Mundra Port Special Economic Zone); it was completed in 2006. KRCL has already repaid its entire debt and is now poised to finance doubling of the 271 km broad gauge alignment from Samarkhilai to Palanpur through its own earnings.

The government of Gujarat also foot part of the bill for the 62 km-long Bharuch-Dahej link, which was completed only last year. It provides the Dahej port on the West coast with valuable rail connectivity. On the other hand, Reliance Industries is planning to participate in the Rewas port connectivity project through a 74 per cent stake.

The 113 km-long new line from Krishnapattanam port on the East coast to Obulavaripalle ~ part financed by government of Andhra Pradesh ~ is still under construction. Though 21 km of the line has been constructed, it has already started yielding rich dividends.

When completed till Obulavaripalle, it will find itself connected to the Mumbai-Chennai sector of the golden quadrilateral, boosting its potential. It will provide an alternative to the Visakhapatnam and Kakinada ports of Andhra Pradesh on East coast.

The Rs 735-crore Haridaspur-Paradip new railway line project, now on the drawing board, has the Aditya Birla group and government of Odisha as equity partners. The line would shorten by 40 km the existing route from Banspani to Paradip port, providing an alternative and faster route for export of iron-ore.

rc acharya
The writer is former Member, Railway Board


Published in: on June 13, 2013 at 1:09 pm  Leave a Comment  
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Public, Private Partnership (PPP) model for Hyderabad Metro Rail

The Comptroller and Auditor General (CAG) has found loopholes in the Delhi airport modernisation project. The Delhi metro-airport link line has gone into arbitration because of structural faults detected on the viaduct and dispute in passenger traffic projections.

The Public, Private Partnership (PPP) working modes have come under intense scrutiny with critics bashing them up. While the jury is still out on issues being faced by these two projects, the government – Central & State both, are sure about the PPPs role in infrastructure development.

The elevated metro rail project for Hyderabad too is being constructed under this model and top officials dealing with it assert this is the right way to go.

Intense deliberations

“The PPP mode was chosen after intense deliberations. There are built-in precautions in the Concessionnaire Agreement (CA) and a single agency – L&T Metro Rail Hyderabad, end to end, is designing, constructing and will later operate & maintain once commissioned till the contract time, 30 years, which can be extended for another 30 years,” explains Hyderabad Metro Rail (HMR) Managing Director N.V.S. Reddy.

Not wanting to get into any issues concerning the two Delhi projects, he affirms, “Our model was very clear from the beginning. The government has openly indicated what it was going to give like 269 acres of land for stations and depots besides facilitating the right of way in widening roads, shifting utilities, etc.,” he says.

‘Joint partnership’

Appointment of Louis Berger, a noted engineering firm, as the Independent Engineer (IE) for the project with the consultancy cost of Rs.83.60 crore to be shared equally by the HMR and L&TMRH, is a significant aspect.

“We do not interfere with the IE and it’s a joint partnership,” attests Mr. Reddy.

The IE will check designs and drawings submitted by the concessionaire, give recommendations, inspect and monitor quality of work at every stage to ensure the system is built as per the prescribed technical specifications, performance criteria and safety standards.

HMR has also another rung of railway experts, retired personnel from high positions to assist in ensuring standards in construction and safety.

The fares have been frozen with the price escalation formula depending on the inflation to be okayed by the government so that “no one can influence” them, he avers.

Effectively it means no surprises such as development fee when the services begin to run will be in store.

The Rs.14,143 crore 72.16 km elevated metro line project being constructed across three traffic corridors has also obtained a viability gap funding of Rs.1,458 from the Centre.

There appears be no doubt about the revenue model either. Losses are expected in the first six or seven years of operations and in a 60 years period, five to six of ‘low’ periods have been factored in.

High earnings

“Real estate earnings will be high because of the transit oriented development as the lines are being built on the dense traffic corridors. Our ridership projection of 15 lakh-25 lakh per day in a 10 year span was not contested. Sure, there are lots of risks involved but it’s a calculated risk and progress is about someone taking the first step,” avers the MD.


Joshi pushes for private investment to boost railway revenue

Railways minister C P Joshi seems to be pushing UPA’s reforms agenda, including encouraging private investment to revive the cash-strapped national transporter, in a big way.

The much-touted high-speed trains are back on the agenda amid indications that a pact with Spain will be signed on Friday to explore the possibilities of introducing bullet trains along with improvement of rail safety measures.

Sources said that Railway Board made a presentation before Joshi on the scope of starting public-private-partnership (PPP) in rail projects, particularly in laying of railway tracks.

In its presentation, the Board has outlined that the priority areas can be laying tracks for port connectivity and new tracks for better coal linkage.

The earlier proposal on promoting PPP in rail projects — conceived during Mukul Roy’s tenure — was sent to Joshi after the ministry came back to the Congress’s kitty.

An official said that Joshi wanted to get a clear picture of how the Board planned to push PPP model in this sector.

Sources said this can be the beginning of railways preparing a note to seek Cabinet nod on policy issues to initiate a few pilot projects under PPP mode.


Railways PPPs need Rs 80,000 cr

n estimated Rs 80,000 crore of private investment will be required for implementation of various PPP (public private partnership) projects identified by the Railways. The areas to be covered under PPP will include an elevated rail corridor, high-speed corridors, redevelopment of stations, logistics parks, private freight terminals, port connectivity, dedicated freight corridor, loco and coach manufacturing units, energy conservation, etc. The projects identified include the Rs 20,000-crore Mumbai-Ahmedabad high-speed corridor, the Rs 20,000-crore elevated rail corridor between Churchgate and Virar in Mumbai, Rs 10,000 crore for redevelopment of stations, the Rs 10,000-crore dedicated freight corridor between Sonnagar (Bihar) and Dankuni (Bengal), Rs 6,000 crore for energy projects, Rs 5,000 crore for port connectivity projects, Rs 3,000-crore loco and coach manufacturing units, Rs 3,000-crore logistics parks and Rs 2,815-crore private freight terminals and other freight schemes. A modified outlay of Rs 5.48 lakh crore has been proposed for the 12 {+t} {+h} Five Year Plan by the Ministry to Planning Commission for meeting the requirements of expansion, modernisation and safety. For financing this outlay, gross budgetary support, successful implementation of PPP in identified areas and mobilisation of internal resources through conventional and non-conventional means would be necessary. Indian Railways, it is learnt, is open to foreign direct investment (FDI) in PPP projects within the overall FDI policy framework.

The Minister of State for Railways, while replying to a question in the Lok Sabha recently, however, conceded that the completion of the projects might be extended up to 13 {+t} {+h} Plan.


Centre-State drama stalls Ahmedabad airport’s warehouse
The opening of Ahmedabad airport’s perishables warehouse has been postponed, it is learnt. The Airport Authority of India (AAI) is believed to have stalled the commissioning of Gujarat’s first perishable air cargo warehouse at the Sardar Vallabhai Patel International Airport because the State Government-controlled agency entrusted with running the complex has allegedly breached the contract by calling in a private enterprise to manage its operations. The AAI officials say Gujarat Agro Industries Corporation Ltd’s move to employ Cargo Service Centre India Private Limited (CSC) violated the terms under which it was allotted 3,600 sq. m at the airport for seven years. It is complained that Gujarat Agro never declared Cargo Service’ name earlier even though it had signed an understanding with the latter in June 2010 for the management of its operations at the new cargo complex and other places in the State. The rule also says that the basic condition for which the land has been allotted on lease can’t be changed. In this case, the condition was that the land could be used only for handling perishable cargo. The Gujarat Agro Managing Director has been quoted as saying, “CSC will only handle the cargo. They are not a beneficiary as claimed by the AAI. We have written letters to the AAI chairman in New Delhi on numerous occasions in the past one year, but they are delaying it.” Yet another example of Centre-State confrontation.


Idle fleet rising unusually since July
There are 400 per cent more containerships in the 500 TEU-plus range laid up at the end of July than there were at the end of July last year, reports Alphaliner, a Paris-based shipping consultancy agency. At the end of July this year, there were 216 units, aggregating 467,000 TEU against the end of July 2011 tally of 75 ships totalling 115,000 TEU, says a report quoting the agency. Hardest hit are non-operating owners whose share of lay-ups is 79 per cent by TEU and 82 per cent by number of ships. Only one out of five of the lay-ups are carrier-controlled as more carriers download surplus tonnage on ship lessors. Panamax ships of less than 5,000 TEU ships suffer most. The idle fleet has been gradually rising since the beginning of July, and shows a markedly different pattern from the past two years when the idle fleet only started to increase in August and September. Carriers are cutting back capacity much earlier due to the weak cargo demand especially in the euro zone areas, with the expected peak season cargo demand failing to materialise. Unlike recent years, no major new peak season strings have been announced so far on main head hauls.


(This article was published in the Business Line print edition dated September 3, 2012)

Railways try to woo investors

Much like the new car models that are launched to lure buyers and increase sales, the railways too has been experimenting with new models of Public-Private-Partnership (PPP) for financing its projects for past many years, but has been dogged by poor and unimaginative marketing strategies, with the result that not much success has come its way. Now once again the Ministry of Railways has approached the Union Cabinet for approval to new variants of its PPP models to attract private investors in funding its connectivity projects. In 2010, the railways had initiated a new R3i (Railway In­frastructure Investment Initiative) policy aimed at attracting private sector participation in similar projects with a view to retaining and increasing rail share in freight traffic. This was not made applicable to lines intending to pro­vide connectivity to coal mines and iron ore mines, directly or indirectly. It did not take the railways long to discover that this policy had failed to attract sufficient investment from the private sector. Hence, the PPP structure was redesigned, and under the new proposal, the owner or concessionaire has been allowed to develop rail connectivity to ports and mines as private railway lines by acquiring land and mak­ing investments in it.

This is not the first time that the Indian Rail­ways has fallen back on a PPP, for garnering ad­ditional funds. Indeed, whenever its finances have been in the doldrums, the railways have found it convenient to use PPP as a good peg to hang its coat on. We have noticed budget documents an­nouncing new initiatives on PPP, white papers making a prominent mention of it, and fresh policy circulars getting issued to reassure all and sundry of the seriousness with which railways is pursuing this item on its agenda. The Indian Rail­ways’ Vision Paper 2020, presented to Parliament in December 2009, had highlighted PPP as a critical mission area and also gave out a long list of activities identified for execution through this medium: multi-modal logistics parks, develop­ment of world class stations, dedicated freight corridors, et al. Unfortunately, good intentions are not getting translated into action.

A few years ago, the railways had proposed a PPP model for augmenting wagon and locomo­tive manufacturing capacity. A number of re­puted international transportation companies had evinced interest in participating in these projects. However, since the railways were asked to commit to assured offtakes of locomotives and wagons from private manufacturers for at least 10 years, besides contributing towards initial working capital of these projects, this model was promptly dumped, as railways feared that it may be forced to close down its existing manufactur­ing units if private parties were allowed to set up new factories.

It is high time railways did some introspection and realised that the complex procedures and legal framework within which the Public-Pri­vate-Partnership projects are required to oper­ate in railways have not been able to incentivise the private sector in participating in such proj­ects. The procedures show a distinct bias to­wards the railways, leading to the perception that the PPP partners are not treated as equals. In the container train operations, for instance, which the railways claim to be its major PPP initiative, private players are not happy since they feel that there is no level playing field for them and the railways have been denying them their fair share in the venture. They complain of unreasonably high fees for use of terminals built on railway land, and of the differential haulage rates, which has cut into their profit margins. Moreover, frequent changes in the haulage charges and other terms and conditions make it difficult for private players to enter into long-term commitments given to their clients. This feeling of uncertainty is not conducive to a healthy business climate.

It is essential to create a proper PPP en­abling environment with streamlined proce­dures and a right mix of fiscal incentives and risk mitigation measures to attract private sector to participate in infrastructure projects. Setting up of an independent regulatory body that can enforce contracts, settle disputes and resolve the conflict of interest between rail­ways and private players can help in winning the latter’s confidence.

A probable factor causing the progress in PPP in railways remaining tardy is that whereas in ports, highways and airports the projects can, by and large, be operated and maintained indepen­dently of the existing system, it is not possible to do the same in railways, where any project has to be an extension to an existing larger railway network. As railway activities are not readily ac­cessible to the private sector, it becomes a major constraint in developing a sound PPP venture. The remedy lies in railways viewing private in­vestors as potential partners rather than as com­petitors. The former railway minister had also wanted the existing marketing schemes to be ‘reviewed thoroughly to give them greater mar­ket focus, and provide greater control to the rail-user by making him a stakeholder’.

The Planning Commission estimates that pri­vate investment mobilisation in the railways in the Eleventh Plan is likely to be only 4 per cent of the Plan outlay. This is far less than the private capital share in other sectors, such as ports 80 per cent, airports 64 per cent and roads 16 per cent. Large funds are required for investment in new projects in the Twelfth Plan period. These cannot be mobilised through budgetary support and market borrowings alone, and PPP projects can provide a shot in the arm. However, unless there is a major policy shift and railways shed its baggage of past ideology, it is unlikely that this shortfall can be met from PPP projects.

A parliamentary panel recently observed that the railways, because of the long gestation pe­riod and relatively low returns, should not bank too heavily on the PPP route but instead ex­plore other avenues for resource generation. These are valid observations, because PPP can­not be taken as the ultimate funding solution. Indeed, reliance on private participation does in no way diminish the role of the government in providing the resources and leadership nec­essary to build, operate and maintain sustain­able public infrastructure.


Public-private JVs for new rly stations

The railways have decided to go the PPP route in building two world-class stations on land belonging to Binny Mills (near the city railway station) and at Byappanahalli, as the state government is yet to respond to their request to provide the land at both places free of cost.

Senior officials of SWR, the executing agency, said, “We need 90 acres of land for the project at Byappanahalli. The government has asked us to deposit Rs 200 crore in the court for the land, which belongs to NGEF. We do not have this kind of money. Hence, SWR has come up with the PPP model and we have prepared a modified draft for 45 acres. The proposal has been sent to the railway board and we are awaiting its nod.”


The PPP model will help the successful bidder reap the benefits of his investment for 33 years. If the railway board gives the nod for SWR’s proposal, the bidder will have to deposit Rs 200 crore in the court.

The proposed station will be close to the Metro Rail and KSRTC terminals. The bidder will be free to construct a mall or commercial complex as part of the project.

In the Binny Mills case too, SWR has asked for three acres of land free of cost.
Infrastructure development principal secretary V Madhu said, “SWR has asked us to provide land for these two proposed stations free of cost. We haven’t taken any decision as yet. Meanwhile, we have asked SWR to submit detailed project reports.”


Published in: on February 12, 2011 at 3:29 pm  Leave a Comment  
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Railway lines on PPP model mooted

BANGALORE: Union Minister of State for Railways KH Muniyappa on Tuesday said that the state government was preparing a draft for getting 20 new railway projects, on private public partnership (PPP) basis, sanctioned for the state. The proposal will be placed before Parliament after it is approved by the Railway Board.

Muniyappa told reporters, “For the first time in the history of the Indian Railways we are mooting laying of new lines on a PPP mode. At present, there are 63,000 kilometres of railway lines in the country and there is a demand for laying 50,000 kilomet res of new lines. We are not able to meet this demand due to financial constraints.

If the PPP mode is approved, it will help us meet the demands at the earliest”.

Muniyappa also said that the railways had decided to convert 1,000 manned level crossings into unmanned level crossings in the country by constructing railway overbridges or underbridges.

The railways is constructing 58 such bridges in the state and is awaiting BBMP’s sanction for nine more bridges.

 Union Minister for Railways Mamata Banerjee will flag off the state’s first Duronto train from Howrah to Yeshwantpur on Wednesday.

 The train will make its maiden trip on the return direction from Yeshwantpur on January 3, Muniyappa announced.

 The Railways will be extending Mysore-Tirupati fast passenger upto Chamarajanagar in the first week of January and the Mumbai-Karwar Express upto Mangalore by the end of January.

 It will also introduce Bangalore- Kochuveli superfast express and Lucknow-Rae Bareli-Bangalore Express by February.

 With that, all the trains announced for the state would be introduced.

 Railways will also be undertaking 57 kilometres of gauge conversion work, 54 kilometre of doubling work and will lay 65 kilometres of new lines, he said.

Muniyappa said that the environment department was yet to give clearance for the Hubli-Ankola and Bangalore-Satyamangalam lines. The high-level committee headed by ADG Gangopadhyaya had surveyed the realigned Hubli-Ankola line and a decision would be taken after it submitted the report.

 “I have requested the chief minister to hold a meeting to find solutions to pending issues and remove bottlenecks for the projects,” he added.


Published in: on January 2, 2010 at 7:26 am  Leave a Comment  

New lease of life for High Speed Rail Link

Bangalore : The High Speed Rail Link (HSRL) to Bengaluru International Airport (BIA) is all set to pick up speed after initial hiccups. The
Rs 5,700-crore project is coming up for the Viability Gap Funding (VGF) review by the central government.

Notwithstanding the economic meltdown, 27 companies of international repute have applied for the public-private partnership (PPP) project.

Billed as one of the largest PPP projects, the proposal will be placed before the Centre for clearance to avail of Rs 1,040 crore, a grant to be released under VGF. The meeting, earlier scheduled for this week, has been postponed to May 10. Once the project is cleared, the VGF will be released during implementation.

The project was stalled for a while last year due to bureaucratic wrangles. Just when everything seemed on track, the infrastructure development department and ABIDe lobbied hard against it and suggested alternatives. However, the implementing agency, Karnataka State Industrial Investment Development Corporation (KSIIDC), and Delhi Metro Rail’s E Sreedharan, pushed for the project. Finally, the state cabinet, which met in Belgaum during the legislative session in January, gave its nod — all over again.

Earlier, tenders were floated for Request For Qualification in August but after cabinet approval, KSIIDC called for a second pre-bid meeting next month with the 27 firms which participated in the tendering process.

The 34-km rail link starts from M G Road and runs along the right side of the national highway to reach BIA. For the project, an estimated 162 acres have to be acquired, of which 130 are private and NHAI lands. Compensation of Rs 532 crore has been allocated for private lands and government/BBMP properties will be acquired free of cost.


Published in: on April 29, 2009 at 5:05 pm  Leave a Comment  
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