Rly's JV model takes off, 12 states to share equity for development of railway infra

Railways has formed joint venture companies with 12 states with equity participation of 49:51 respectively for effective and speedy implementation of rail projects in the country, a senior official of the ministry said Thursday.

The first such project under this model was approved by the Cabinet on September 26 in Chhattisgarh where a new broad gauge electrified line of 294.53 route km from Katghora to Dongargarh will provide rail connectivity to unserved areas of the state.

"We have started this model with share of 51 per cent for the state and 49 per cent for us. We have formed such companies with 12 states. In this we make the JV and then we tell the states to choose the line. After we are convinced, we decide to go ahead.

"If the line is profitable, we take a loan through a special purpose vehicle. Railways will spend only Rs 350 crore out of the total Rs 5950.47 crore. The state will pay Rs 365 crore. There are coal companies which will get benefited that are also part of this.

So over all 25 per cent of the cost is through equity and 75 per cent is through loans. We will repay the loan in 20 years," said Mahesh Gupta, Member, Engineering, Railway Board.

While the line in Chhattisgarh is primarily for goods trains, two pairs of passenger trains are being envisaged for the state as well. The JVs for other states could be for both passenger or goods trains depending on the needs of the state government.

"In this model, the onus is on the state government to determine which line will be beneficial for them in terms of profit. If they propose a profitable line, we are happy to work with them.

"This is the model which would mean that the state governments and railways will together share the profits and bear the losses, if any," said Gupta.

While Maharashtra is likely to be the second state to get the nod for a proposed line, the other states with JVs are Assam, Maharashtra, Andhra Pradesh, Chhattisgarh, Haryana, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra and Odisha.

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