Railways to form joint ventures with states for infra funds

While each JV would have an initial paid up capital of Rs.100 crore based on the quantum of projects to be undertaken, the Ministry of Railways’ initial paid-up capital is limited to Rs.50 crore per state The Dollar Business Bureau

Railways to form JVs with states for infra funds

The joint venture companies would be formed with equity participation of Ministry of Railways and concerned state governments

The Union Cabinet gave its approval for the Ministry of Railways to form joint venture companies with state governments to mobilize resources for undertaking various rail infrastructure projects across the country. The joint venture companies, to be formed with equity participation of the Ministry of Railways and concerned state governments, are expected to ensure greater participation of states in implementation of railway projects, both in terms of financial participation and decision-making. This will also facilitate faster statutory approvals and land acquisition for projects. Besides travelling people, various cement, steel, power plant companies will get the rail link for transportation of their raw material and finished products. While each joint venture (JV) will have an initial paid up capital of Rs.100crore based on the quantum of projects to be undertaken, the Ministry of Railways initial paid-up capital is limited to Rs.50 crore per state. And further infusion of the fund/equity shall be done post approval of the project and its funding at the level of appropriate competent authority. “The JV can also form project-specific SPVs with equity holding by other shareholders like banks, ports, public sector undertakings, mining companies, among others,” a government statement said on Wednesday. The Ministry of Railways has been gearing up for modernisation of all stations across the country. Finance Minister Arun Jaitely, last month, had said that the Ministry of Railways will soon call for bids for modernization of 400 stations. He had also said that besides issuance of bonds, the Railways was also keen on inviting foreign investments and pitching for private sector participation towards various projects aimed at modernisation. “The Railways has now come on to directionally the right track. We are inviting the private sector including foreign investment into infrastructure… Very shortly, the railways is going to come up with its proposed bids for development of 400 railway stations in the country,” he had said. While the industry bodies suggest the Railways has to gain 3-5 times rise in investments, the National Transport Development Policy Committee says the Indian Railways would require investments worth about Rs.32 lakh crore till 2032. As part of the Indian Railways’ five-year action plan, the government aims to increase the share of rail freight transport on its network from current 30-35% to 50%, on the lines of the US, Russia and China. Railway Minister Suresh Prabhu has an investment plan of Rs.8.5 trillion for a substantial expansion in passenger and freight capacity for the Indian railways over the next five years. Besides, Indian railway was also looking to complete Eastern and Western Corridors by 2019, for which, nearly 9,000 hectares has already been acquired out of 10,000 hectares of required land to complete the expansion.

February 04, 2016 | 05:00pm IST

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The Dollar Business Bureau - Feb 04, 2016 11:20 IST

Railways to form joint ventures with states for infra funds

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