Railways mulls inflation-linked user charges at redeveloped stations

The Indian Railways is planning to come up with inflation-linked user charges from passengers at newly-redeveloped stations. The Railway Board will soon come out with norms to make it part of bid conditions.

In the first phase, the Indian Railway Station Development Corporation (IRSDC), which is the nodal agency for station redevelopment in India, is taking up 60 stations. An empowered group of secretaries had also entrusted them with another 90 stations recently. The first two redeveloped stations at Habibganj and Gandhinagar are expected to be completed by December 2020. Already, 97 per cent of the civil works are completed at Habibganj being developed by Bansal Group. In Gandhinagar, where Kunal Structure is the contractor, 94.05 per cent of the civil works are completed. After the stations are operational, developers will be allowed to take user charges from passengers.

"The ministry is set to come out with a notification in this regard," said S K Lohia, Managing Director and chief executive officer of IRSDC at a press meet today. "Expenses can go up and even deflation can happen. If we are giving a station to someone for 60 years, the charges have to be in tune with market realities. Tomorrow if there is deflation, then charges can come down also," he said. This is different from airports, where the concessionaire gets the user charges cleared from the government.  

"There is a certainty of revenue from user charges. Whether it is airports or highways, the user charges are a very big component. In fact, 99 per cent of the project cost is funded by it. However, in railway the profile of passengers is such that the user charges will be less as compared to airports," he added. 

In the recent bids invited for four railway stations-–Nagpur, Gwalior, Amritsar and Sabarmati--nine companies were shortlisted in all. These included GMR Business and Consultancy, G R Infraprojects, Kalpataru Power Transmission, Anchorage Infrastructure Investments Holdings, ISQ Asia Infrastructure Investments, Monte Carlo, JKB Infrastructure, Kalyan Toll Infrastructure, Cube Construction Engineering. For the four stations, a total of 32 applications were received under the Request for Qualification (RFQ) stage from these nine companies. Out of these, 29 were selected. The total Indicative cost for the redevelopment of the four stations is about Rs 1,300 crore. The total built-up area allowed for commercial development is 5.4 million square feet.

IRSDC is at the core of Indian Railways' plan to transform the country’s railway stations into world-class hubs. These redeveloped hubs will be called ‘Railopolis’. They will attract huge investments, create business opportunities in the heart of cities, and city centres around redeveloped stations. To speed up the first phase of the redevelopment of 42 railways stations, the government had last year adopted a cluster approachm putting five public sector companies in charge of each cluster. The companies included RITES, Mecon, National Project Construction Corporation (NPCC), Engineering Projects (India) (EPIL) and Bridge and Roof Company (India) (B&R). Apart from these 42 pooled stations, IRSDC has already taken up 13 stations for redevelopment.

According to an Icra report, in the medium term (1-3 years), 50 stations are likely to be taken up for redevelopment at an estimated cost of Rs 10,000-20,000 crore, depending on the extent of commercial development around these stations.