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Door wide open for pvt role

The Indian Railways (IR) have taken a leaf out of the country’s National Highway Development Programme with Railway Minister Mamata Banerjee clearly tilting focus towards public-private-partnership (PPP) initiatives to fund projects. It has been there in trickles before, but now the ambitions have been significantly scaled up.

business Updated: Feb 25, 2010 02:38 IST
HT Correspondent

The Indian Railways (IR) have taken a leaf out of the country’s National Highway Development Programme with Railway Minister Mamata Banerjee clearly tilting focus towards public-private-partnership (PPP) initiatives to fund projects. It has been there in trickles before, but now the ambitions have been significantly scaled up.

“We will develop business models to boost PPP investments,” Banerjee said while presenting the Railway Budget for 2010-11 in Lok Sabha on Wednesday.

PPP activity in railways has been far less than for that of roads. Though it is not clear how wide the ambit of PPP will be, these could potentially cover everything from wagons and modernisation of stations to building of tracks and hubs.

Between 1999 and 2007, private investments worth only Rs 1,000 crore have been put in railway projects, compared with Rs 43,500 crore in highways during the same period, said.

“While the IR has benefited from a few successful PPP investments, several other projects have not generated much interest from private sector,” said Rajesh Samson, partner at consulting firm Ernst & Young.

To woo investors, Banerjee said a special task force will be set up to approve private investment proposals within 100 days.

Among the successful PPP projects in railways so far has been a venture between the private sector Pipavav Railway Corp Ltd and Gujarat Pipavav Port Ltd to develop a 271-km broad gauge line.

Manish Saigal, head of transport and logistics at consulting firm KPMG said he expects Rs 10,000 to 20,000 crore to be deployed in railway PPPs, of which the government will extend about 40 per cent.