Rail infrastructure investment to boost commodities

[Indian Railway News]

http://www.commodityonline.com/news/Rail-infrastructure-investment-
to-boost-commodities-12707-3-1.html

Note: URL shows photo of KYN WDM2 # 17492!

The commodity sector in India is set to get a boost following Indian
Railways decision to adopt public private partnership model for
several of its non-core projects including Dedicated Freight
Corridor linking ports and mines.

Manufacturing of new locomotives, high speed corridors,
commercialization of 43,000 acres of vacant land and multi-modal
logistic parks will give a boost to the sagging commodities sector
in the country in the coming years.

Over the decade, private sector participation in the railway sector
has increased, though it remains limited. The public-private
partnership (PPP) model is becoming increasingly popular in order to
mobilize capital and improve operation and management skills. In the
past, IR made several attempts to involve the private sector through
works or management contracts in areas such as catering wagon
ownership and leasing, and joint ventures (JVs) for rail
infrastructure projects.

As a result, several initiatives were taken up on a PPP basis. These
included commercial utilization of railway land, private operation
of container trains, catering services, warehouses and wagon
procurement. A number of PPP projects are also on the anvil. These
include construction of dedicated freight corridors, modernization
of railway stations, manufacture of rolling stock, utilization of
vacant railway land, development of railside warehouses,
construction of passenger terminals and development of VSAT hubs.

It has been assessed that Indian Railways would need to spend around
Rs. 2,51000 crore (US$62 billion) on various capacity enhancement
measures over the next five year period. A major part of the
investment would come from internally generated resources. Budgetary
support to the extent feasible would also come forth. However, to
meet the massive investment needed, these would need to be leveraged
to mobilize adequate level extra budgetary resources. Around Rs.
1,00,000 crore is expected to come from extra budgetary resources
including Public Private Partnership (PPP). PPP would, thus, play a
crucial role in the attainment of the strategic goals outlined
above.

Construction of DFC
It has been planned to construct a new Dedicated Freight Corridor
(DFC), initially covering about 2700 route kms. equivalent to around
5000 track kilometers at an approximate cost of Rs. 28000 crore
(US$6 billion) linking the ports of western India and the ports and
mines of Eastern India to Delhi and Punjab. The construction of this
corridor will be implemented through an SPV being created for the
purpose through a mix of Engineering Procurement and Construction
(EPC) and PPP methods. Ministry of Railways is in the process of
selecting a global consultant to advise on the concession agreement,
principles of track access charges and other financing and bidding
issues.

It is envisaged that innovative ideas on design, construction and
maintenance of railway to achieve optimal life – cycle costs would
be forthcoming through PPP especially as the work progresses on the
initial two corridors and further corridors are taken up. The
concessionaire could also tap additional ancillary revenue streams
through commercial exploitation of and, construction of freight
terminal/logistic park/ICDs etc.

Railway stations at metropolitan cities and important tourist
centres need to be modernized to provide world-class passenger
amenities and services to the large multitude of passengers using
these stations. Indian Railways is planning to do so by attracting
private investments in the area by leveraging the land around and
airspace above the stations.

The concessionaire would be expected to construct and maintain the
operational and passenger areas free of cost, share the revenue
earned from the real-estate created and hand over the same after the
concession period. Altogether 26 stations have been identified in
the first stage.

These are CST Mumbai (Carnac Bunder), Pune, Howrah (Kolkata),
Lucknow, New Delhi, Anand Vihar and Bijwasan at Delhi, Amritsar,
Chandigarh, Varanasi, Chennai, Thiruvananthapuram, Secunderabad,
Ahmedabad, Patna, Bhubaneshwar, Mathura, Agra, Gaya, Bangalore,
Jaipur, Nagpur, Tirupati, Bhopal, Kanpur and Guwahati. Pre-
qualification process for bidders for the pilot project for New
Delhi Station has been initiated. Redevelopment of Patna,
Secunderabad and Mumbai will also be taken up during the current
year. Development of other stations and green field passenger
terminals would also be taken up subsequently.

Commercial Utilization of Land
Indian Railways has approximately 43,000 hectares of vacant land.
These are mostly alongside track in longitudinal strips, around
railway stations, and in railway colonies especially in metro and
other important cities/towns with potential of being used
commercially to generate revenue as well as capital for
modernization and capacity addition. A new body, namely Rail Land
Development Authority (RLDA) has been set up under the Railway
(Amendment) Act 2005 to pursue, interalia, the main objectives of
generating revenue and up grading railway assets. 110 sites have
already been entrusted to RLDA.

Setting up of SPV for manufacturing
With sustained economic growth and the resultant demand for rail
transport the requirement of rolling stock has increased manifold.
The requirement of coaches/Electrical Multiple Units is projected at
22689 vehicle unit for the XI Five Year Plan The gap between the
requirement and the combined capacity of the two Production Units at
Integral Coach Factory, Perambur and Rail Coach Factory, Kapurthala
(around 2500 per annum) is planned to be bridged by augmenting the
existing capacity of these Production Units and setting up a new
manufacturing unit through a JV under PPP.

Similarly, the requirement of Electric and Diesel Locomotives has
been projected at 1800 each during the XI Five Year Plan i.e. 360
locos per year. The existing in – house capacity for the manufacture
of these locomotives is presently 150 per annum for Electric and for
Diesel. The gap between the requirement and capacity is also planned
to be bridged by setting up two locomotive manufacturing units one
each for diesel and electric locomotives through PPP. Possibility of
PPP through long-term demand guarantee to prospective manufactures
of modern wagons is also being explored.

High Speed Corridors
Pre-feasibility studies are being awarded for a few identified
corridors to examine. Linking a few of our bustling metropolises
with a high speed rail links to facilitate train travel over 600-
1000 km within 2.5 to 4 hours. All options including PPP will be
explored.

Operation of container trains and construction of Multi-modal
Logistics Parks
Private operators have been allowed to manage rail-borne Container
Services on Indian Railways. Concession agreement setting out the
terms of such operation has been signed with 15 private operators.
The scheme is also open for other operators to join. So far private
operators have inducted 45 rakes and built three ICDs at Garihassru,
Patli and Loni.

Policy framework to facilitate setting up of Multi-modal Logistics
Parks (MLPs) in SEZs or private land with rail connectivity has been
formulated. The policy also evisages utilization or surplus railway
land available at suitable locations for development of MLPs and/or
bulk or dedicated freight terminals.

Wagon investment Scheme
The Wagon Investment Scheme (WIS) with provisions for freight rebate
and supply of guaranteed number of rakes over periods ranging from 7-
15 years for various categories of wagons has been in operation for
the past few years. The scheme is being replaced by a new scheme to
broaden its appeal to investors providing high-capacity and special
purpose wagons. A scheme to facilitate third-party leasing of wagons
is also under finalization.

Port Connectivity works and other infrastructure projects through
Rail Vikas Nigam Limited (RVNL) has been mandated to undertake
capacity augmentation works and port connectivity projects by
establishing Special Purpose Vehicles (SPVs) Some of the projects
taken up or under consideration of RVNL include Palanpur-Gandhidham
gauge conversion project (linking Kandla and Mundhra ports to North
India), Haridaspur-Paradeep New Line (linking iron ore mines of
Orissa and Jharkhand to Pradeep port), Anugul-Sukinda (linking iron-
ore and coal-belts of Orissa), Obulavaripalli-Krishnapatnam – New
Line Project linking the Krishnapatnam port of Andhra Pradesh,
Bharuch-Dahej and Surt-Hazira projects in the State of Gujarat and
Penn-Rewas Port link (Maharashtra)

Catering Services, Budget Hotels and Food Plazas
Indian Railway Catering and Tourism Corporation (IRCTC) has been
mandated to develop catering services, budget hotels and food plazas
at major stations through involvement of private entrepreneurs.

IRCTC is commissioning new Food Plazas in Railway premises with
private participation. The license period for food plazas is of nine
years with a provision of extension of three years. Already 53 such
Food Plazas have been commissioned.

Indian Railways is also in the process of carrying out an
examination of the scope of need-based `base kitchens'
and `launderettes' with public private partnership to strengthen the
infrastructure for on-board services. Call centers are also being
planned under PPP by IRCTC to cater to the need for information
dissemination to the railway customers.

Apart from the above projects, for which Indian Railway Catering and
Tourism Corporation (IRCTC) would act as a nodal agency, Indian
Railway is also planning to launch new services for the luxury
tourism segment on the pattern of `Palace on Wheel' in partnership
with interested State Governments.

[Indian Railway News]