Prabhu says Indian Railways will exceed Rs 8.5 lakh cr five-yr capex target

Said he discussed the possibility of a $30-bn fund with World Bank to finance key railway projects

Days after a report that the Prime Minister’s Office had expressed concern over a slow pace of spending by the railways, minister Suresh Prabhu said they’d “far exceed” the capital expenditure target of Rs 8.5 lakh crore set for the five years till 2019, including this financial year's budget target of a little over Rs 1 lakh crore.

“We will easily surpass the target. The budget did not talk about the Dedicated Freight Corridor project, the funding for which, Rs 82,000 crore, was recently approved by the cabinet. We have already issued contracts worth Rs 15,000 crore in the six months of the current financial year. The rest will come soon,” he told reporters.
 

Additional spending would, he said, materialise from two other initiatives by the ministry. One is “using the money from customers like Coal India and Steel Authority of India for rail evacuation projects, for which memorandums of understanding are being signed with state governments and port connectivity projects.”

Prabhu also said he had, in a meeting last week with World Bank chief Mulyani Indrawati, discussed the possibility of creating a $30 billion fund to finance key rail projects. “We will make an announcement at the right time,” he said, refusing to share details but disclosing the Bank would act as anchor investor for creation of the proposed fund.

The minister said additional funding of $15-20 bn would soon materialise from implementation of the government’s plan to award contracts for redevelopment of 400 stations on the Swiss Challenge method, a model of project development under public-private partnership which was recently approved by the cabinet.

He also announced a plan to seek Rs 1.5 lakh crore from Life Insurance Corporation for investments in railway projects with a high rate of return has been approved by the board of the state-owned insurer. “Also, 17 states have given their approval for investments through creation of joint ventures for new line capacity creation projects. Putting all this together, we will exceed the Rs 8.5 lakh crore plan,” he said.

Prabhu also said at least Rs 70,000 crore will come “within the next few months” from award of two contracts — for setting up diesel and electric locomotive factories in Bihar, and supply of 15 electric multiple unit train sets or 315 railcars for improving the speed of Rajdhani and Shatabdi trains. Bids for the loco factories were opened by the ministry earlier this month; it is yet to announce the winners.