Land policy delay hurdle to Container Corporation sale, says panel

Railway ministry denies charge, says divestment planned for next year

A top-level inter-ministerial group (IMG) has raised concerns over delays in the railway ministry’s land licence policy, resulting in roadblocks for the privatisation of Container Corporation of India (CONCOR). The committee, chaired by the Department of Investment and Public Asset Management (Dipam) secretary, is overseeing the CONCOR privatisation that was announced in November 2019.

The new policy is expected to provide clarity on lease rates the new buyer of CONCOR will have to pay. A source said the railway ministry had now floated a cabinet note for the policy.  

The railway ministry, in response to Business Standard’s queries, said: “There is no delay in making of the land licence policy, and it is categorically denied.” It added that the CONCOR disinvestment is planned for next year as per the Budget Speech. Co-chaired by a Railway Board member, the inter-ministerial panel also has representation from the Department of Expenditure, Economic Affairs, Corporate Affairs, Law, among others.

The Cabinet Committee on Economic Affairs, in November 2019, had given an in-principle approval for privatisation of CONCOR, along with Bharat Petroleum Corporation (BPCL) and Shipping Corporation of India (SCI). While BPCL and SCI are in different stages of divestment, the process to privatise CONCOR is yet to start.

“In spite of Covid-19, we have kept working towards strategic disinvestment. A number of transactions namely BPCL, Air India, SCI, CONCOR, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in 2021-22,” Finance Minister Nirmala Sitharaman had said in her Budget Speech.

The railway ministry said: “It now prides itself in completion of projects on time and creating new management solutions to speed up the existing projects and possibly even complete ahead of standard time lines. One of the key pillar of new and efficient management mantra is due diligence at early stages rather than facing litigation or work getting stuck at the later stages of projects. One of the major reasons for many projects sanctioned and not getting completed prior to 2014 was this lack of a comprehensive due diligence. Railways now undertakes multiple round of dialogues with all private and public stakeholders before finalising these litigation-free policies. In spite of this kind of comprehensive due diligence, there is no delay in submission to policy….”

The IMG has also told Railways there should be enough clarity in terms of leasing rates for potential investors or buyers of CONCOR. There will not be any buyers if the government does not provide clarity about the company’s business for at least 10 years, the IMG is learnt to have said. As the proposed strategic divestment is not a PSU to PSU sale, the entire process should be transparent with clarity on the financials of the business, said another government official.

The railway ministry, in April 2020, had introduced a land licensing fee regime for industrial use of its land which was also extended to CONCOR. Earlier, the PSU’s containers were built on land leased from the railways on a per-container licence fee basis. This led to the PSU paying a licensing fee at 6 per cent per acre of the market value of land, which in turn increased the company’s costs and blocked the government’s plan to privatise CONCOR. 

The Ministry of Railways is learnt to have told the IMG that it was engaged in Covid-related relief measures such as operating Shramik trains, causing delay in policy making. A dearth of manpower during the pandemic was also cited as an issue. The IMG took note of this, while communicating about the disproportionate amount of time taken for the policy, an official said.

“There is no doubt the railways did some extra ordinary work during the Covid times not only in ferrying people back home but also in unleashing an incredible amount of energy and effort to speed up existing infra projects; complete vital maintenance projects, creating records in freight operations,” the ministry said in its response.