 "PPP Projects: Private participation to help meet rise in capital expenditure")
Banking on public-private partnerships (PPP) mode, Railway Minister Suresh Prabhu is looking at private sector for meeting increased capital expenditure. The government intends to set up dedicated freight corridor, port connectivity project, logistic park and warehouses, redevelopment of stations etc, through the PPP mode. In the current financial year, against the Budget Estimates of Rs 5,781 crore through PPP, the Revised Estimates stand at Rs 27,269 crore. For 2016-17, the investment through PPP mode is estimated to be Rs 18,340 crore, 32 per cent less than the Revised Estimates in 2015-16.
In his budget speech, Prabhu said overall, investment would be close to double the average of previous years. He added that this calls for a continuous innovation to find new ways of sourcing funds and executing projects, abandoning the business-as-usual approach.
"Be it by forming joint ventures with states, developing new frameworks for PPP, scouting international markets for rupee bonds or engaging with multilateral and bilateral agencies, Indian Railways will be at the forefront of infrastructure growth in the country," Prabhu said.
Realising port connectivity is an important element to ensure seamless logistics to boost imports and exports for 2016-17, the minister proposed to undertake rail connectivity for the ports of Nargol and Hazira under PPP.
Further, the minister proposed to develop logistics parks and warehouses to rectify the inadequacy of warehousing and transportation facilities, which he said was one of the reasons for the decline in freight. These logistic parks and warehouses would be created through the PPP mode to bring the required efficiency and investment, but also help attract greater traffic.
He added that with the coming in of Transloc, the Transport Logistics Company of India, the railways would emerge as a national logistics provider. The focus will be on providing last-mile connectivity for freight business and significant reduction in logistics costs. At least 10 goods sheds will be developed by Transloc in 2016-17. Further, to capture automobile traffic, the ministry will soon inaugurate India's first rail auto hub in Chennai.
Prabhu also said the Cabinet had approved redevelopment of 400 stations through PPP. This is expected to be the largest transit-oriented development in the world. The ministry is also exploring the possibility of seeking multilateral financial investments for the development of some stations apart from partnering with state governments.
Prabhu also appealed to states to partner the railways in setting up more satellite terminals through PPP mode to increase the number of satellite terminals, which was announced in the previous Budget.
"The government has given lot of emphasis on PPP projects. The proposal to set up three dedicated freight corridors on PPP mode is welcome. But things become clearer once the fine print comes out. I foresee PPP would not only be the preferred mode, lot of projects are likely to be executed on EPC (engineering, procurement, construction) mode," said Abhaya Agarwal, Partner-Infrastructure & PPP, EY.
The minister also said the Indian Railways had recently finalised bids for setting up two locomotive factories with an order book of about Rs 40,000 crore. US-based GE got the contract for the Rs 14,656-crore diesel locomotive factory at Marhowra, in Bihar and French giant Alstom got the electric locomotive project, worth Rs 20,000 crore in Madhepura, about 280 km northeast of Patna (Bihar).
In his budget speech, Prabhu said overall, investment would be close to double the average of previous years. He added that this calls for a continuous innovation to find new ways of sourcing funds and executing projects, abandoning the business-as-usual approach.
"Be it by forming joint ventures with states, developing new frameworks for PPP, scouting international markets for rupee bonds or engaging with multilateral and bilateral agencies, Indian Railways will be at the forefront of infrastructure growth in the country," Prabhu said.
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To counter dwindling freight revenue and, at the same, expanding freight business, the minister announced the construction of more dedicated freight corridors for increased traffic. Prabhu proposed to take up three freight corridors: North-south connecting Delhi to Chennai; east-west connecting Kharagpur to Mumbai; and the east coast corridor connecting Kharagpur to Vijayawada.
Realising port connectivity is an important element to ensure seamless logistics to boost imports and exports for 2016-17, the minister proposed to undertake rail connectivity for the ports of Nargol and Hazira under PPP.
Further, the minister proposed to develop logistics parks and warehouses to rectify the inadequacy of warehousing and transportation facilities, which he said was one of the reasons for the decline in freight. These logistic parks and warehouses would be created through the PPP mode to bring the required efficiency and investment, but also help attract greater traffic.
He added that with the coming in of Transloc, the Transport Logistics Company of India, the railways would emerge as a national logistics provider. The focus will be on providing last-mile connectivity for freight business and significant reduction in logistics costs. At least 10 goods sheds will be developed by Transloc in 2016-17. Further, to capture automobile traffic, the ministry will soon inaugurate India's first rail auto hub in Chennai.
Prabhu also said the Cabinet had approved redevelopment of 400 stations through PPP. This is expected to be the largest transit-oriented development in the world. The ministry is also exploring the possibility of seeking multilateral financial investments for the development of some stations apart from partnering with state governments.
Prabhu also appealed to states to partner the railways in setting up more satellite terminals through PPP mode to increase the number of satellite terminals, which was announced in the previous Budget.
"The government has given lot of emphasis on PPP projects. The proposal to set up three dedicated freight corridors on PPP mode is welcome. But things become clearer once the fine print comes out. I foresee PPP would not only be the preferred mode, lot of projects are likely to be executed on EPC (engineering, procurement, construction) mode," said Abhaya Agarwal, Partner-Infrastructure & PPP, EY.
The minister also said the Indian Railways had recently finalised bids for setting up two locomotive factories with an order book of about Rs 40,000 crore. US-based GE got the contract for the Rs 14,656-crore diesel locomotive factory at Marhowra, in Bihar and French giant Alstom got the electric locomotive project, worth Rs 20,000 crore in Madhepura, about 280 km northeast of Patna (Bihar).