Rail Ministry entity to raise Rs 40 billion from market for stations redevelopment

Indian Rail Ministry’s most ambitious project will boost up by Rs40 billions of Market funding. It is a first phase of the rail ministry’s Rs1-trillion station redevelopment plan and which will set to take off soon. The nodal agency of this will become the second entity, after arm Indian Railway Finance Corporation (IRFC) to raise money from the markets.

Indian Railway Stations Development Corporation (IRSDC) is likely to raise about Rs40 billion from the markets for upgrading at least 50 stations. The rail Ministry is likely to enter into a build-operate-transfer (BOT) annuity model deal with IRSDC. “Through this, the railways will give a letter of comfort, based on which IRSDC will raise money from the markets, with a five-year moratorium period,” said a source.

Rather taking up 600 stations at one go, initially 50 stations will be redeveloped after getting a nod from the PMO to proceed. IRSDC will redevelop under an engineering, procurement, and construction (EPC) model, after getting a response from private entities when bids were invited for 21 stations. Pre-bid meetings held for three stations — Anand Vihar and Bijwasan in Delhi on March 27 and Chandigarh on March 28 — got a response from major companies such as Tata Group, Shapoorji Pallonji, Ahluwalia, IL&FS, and Bharti Realty. “About 25 companies have shown interest for Anand Vihar (about Rs2 billion investment), while 11 have shown interest for Chandigarh (Rs1.3 billion) and Bijwasan (Rs3.5 billion) separately,” said an official.

According to a new plan, Indian Railways will offer 20 percent of the overall area redeveloped for residential purposes; the remaining 80 percent area will be utilized commercially. IRSDC will have the option to build residential structures within the station premises, which are in prime localities. “The stations allotted earlier — including Habibganj (Bhopal) that the Bansal Group is developing and Gandhinagar (Gujarat) — will be commissioned by December 2018,” said S K Lohia, managing director and chief executive of IRSDC.

National Highways Authority of India is following The BOT (annuity) model. It is considered risk-free, as the granting authority will pay to the concessionaire a fixed semi-annual annuity.

The railways had conducted an international design competition for the redevelopment of three stations — Baiyappanahalli, Gwalior, and Nagpur. “For Nagpur, French firm Enia Architects was assigned to come up with a master plan for redevelopment. Deals for other two stations are also done,” the official said.

Source- Business Standard