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Railway Minister Pawan Kumar Bansal hopes to raise Rs 6,000 core through the PPP route to fund the Rs 63,363-crore Plan next year.
For the 12th (2012-17), the railways have an ambitious target of generating Rs 1 lakh crore through PPPs. This would be 19.25 per cent of the total investment target for the Plan. The areas of investments include the elevated rail corridor in Mumbai, parts of the Dedicated Freight Corridor, redevelopment of stations, power generation and energy saving projects, and freight terminals.
"This is a challenging area for Indian Railways, considering the capital-intensive, long-gestation nature of rail infrastructure projects and the limited success achieved so far," Bansal said in the budget speech. (SPRUCING INFRASTRUCTURE)
According to the Plan document, the railways has a large shelf of ongoing projects, whose completion would require about Rs 225,000 crore. The private sector is expected to invest in traffic facilities, electrical works and workshops, plus passenger amenities, among others.
Experts say the appeal to state governments to participate in projects could be a game-changer. "The Centre-state SPV (special purpose vehicle) route has the ability to push projects up the priority list where a state is willing to participate," said Manish Agarwal, executive director-capital projects and infrastructure, PwC India. "The readiness with respect to PPPs is still low and it is better that the purpose and role of PPPs is better thought through before setting high expectations."
With the recently revamped participative policy to enable partnership in ports and mining, the railways hopes to create a win-win model by paying back investments, mainly through freight apportionment. An investment of up to Rs 9,000 crore is expected under these projects, including Rs 3,800 crore for port connectivity, Rs 4,000 crore for coal mine connectivity and Rs 800 crore for iron ore mine connectivity improvements. Besides, Rs 1,000 crore each is proposed to be fixed for the Rail Land Development Authority and the Indian Railways Station Development Corporation in 2013-14.
Hemant Kanoria, chairman and managing director, SREI Infrastructure Finance, said: "This budget sets the stage for a wider scope for PPP in rail projects in the years to come. From ticketing to station improvement to food quality control to improvement of warning systems, these are areas where PPP can also be explored."
The railways, whose performance in PPP projects has been dismal, will need to generate private investments over and above internal funds, borrowings and budgetary support to meet the investment requirements of the Plan.
