Railways signs pact with AP, Kerala to form joint ventures.

The Indian Railways has signed a memorandum of understanding with Andhra Pradesh and Kerala in order to undertake rail projects in those states. Odisha and Maharashtra have already signed similar agreements.

The move is a step towards cooperative federalism, with both the Centre and State working towards the same goal, Railway Minister Suresh Prabhu said here on Wednesday.

In simple terms, the joint venture – to be formed with a 51-49 partnership between the State and the Indian Railways – will identify projects to be undertaken; they will share the costs. The joint venture will get also share the revenue from Indian Railways, based on same formula used for apportioning revenue among Zonal Railways.

Thus, the losses, if any, will also be shared. But, the expectation is that since the joint venture will own the land on which such projects will be built, it can commercially utilise the land and be profitable.

“This will be a remarkable change with decentralisation of railways partly. We will get support from states such as land and other states,” Prabhu added.

The MoU envisages formation of joint venture companies having 51 per cent stake by the State government and 49 per cent stake by the Ministry of Railways. Cost will be shared by States and Centre, with the State providing finances in the form of land, funds and other administrative support. The Indian Railways or the Centre will provide finances of equivalent value.

The land will be owned by this joint venture, a move which will allow the joint venture company to monetise land and raise funds. The move will add to the project viability.

PK Srivastava, former General Manager of South Central Railway, who signed the agreement on behalf of Andhra Pradesh, told BusinessLine that the projects to be taken forward through such joint ventures. They include rail connectivity for Amravati, the new capital of Andhra Pradesh; third line between Vijayawada and Gudur which is a rail link between Chennai and Howrah, Nadikudi-Srikalahasti and Kotipalli and Narsapur.

M Sivasankar, Secretary, Power and Sports Department, Kerala, said that the model of project implementation will be like that of Kochi Metro. The staff cost in initial years will be borne by the initial equity fund put in by the Railways.


HBL