No PSU role in freight corridor, rlys told

When the railways embarked on one of its biggest infrastructure projects "" the dedicated freight corridor "" the brass at Rail Bhavan had thought enlisting the support of some of the public sector undertakings, who are the biggest users of its freight service, may be in order. However, the proposal has been shot down by the Finance Ministry.

The rail ministry decision makers' reasoning had been that the Rs 27,000-crore project would benefit these organisations to a large extent as they would be able to move their traffic at a much faster pace and therefore add to their productivity.

The railways had decided to seek the support of organisations such as Steel Authority of India Limited and Coal India Ltd. The ministry had decided that these organisations could participate in the special purpose vehicle.

However, the finance ministry has said there was no indication whether the PSUs mentioned may have the required funds to support the freight corridor.

The ministry was of the opinion that these undertakings should concentrate only on their core activities and not invest in a rail project, which they were not required to.

The ministry also said there was no precedent to follow while asking the PSUs also to join the SPV being set up for the dedicated freight corridor.

The railways had envisioned an investment of about Rs 9,000 crore from the ministry for the freight corridor project, which would be one-third of the net investment required.

If the PSUs in the user industries were also to contribute some equity, the railways envisioned that the cost of financing the project would come down.

The project has been referred to a Group of Ministers after the Cabinet discussed the issue on Thursday.