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Nine firms to join Orissa railway SPV

The companies, including South Korea's POSCO, will participate in the Rs 590 crore SPV to develop the Paradip-Haridaspur railway line.

india Updated: Oct 07, 2006 19:24 IST

Nine companies, including South Korean steel major POSCO, have confirmed their participation in the Rs 590 crore-special purpose vehicle (SPV) to develop the Paradip-Haridaspur railway line and will sign the share holders' agreement shortly.

"The deck has been cleared for the signing of shareholders' agreement for the SPV with an objective to manage logistics in a very cost effective way," Rail Vikash Nigam Ltd (RVNL) sources told PTI here on Saturday.

The consortium will be led by RVNL, a wholly-owned subsidiary of Indian Railways, with an equity of 48 per cent, while POSCO-India Private Limited, the Indian subsidiary of POSCO, would pick up 10 per cent equity, sources said.

The other players include public sector Paradip Port Trust (10 per cent), Essel Mining Industries Limited (EMIL) (10.91 per cent), Rungta Mining and Industries Limited (RMIL) (10.91 per cent), MSPL Mining (MSPL) (5.45 per cent), Jindal Steel and Power Limited (JSPL) (1.82 per cent), public sector SAIL (1.82 per cent) and Infrastructure Development Corporation of Orissa (IDCO) (0.66 per cent).

The total debt-equity ratio in the SPV would be 1:1.

POSCO-India agreed to pay Rs 27.5 crore towards its 10 per cent equity in the project, a company source said.

The SPV was floated by RVNL along with five other players and the MoU was signed on May 25, 2005.

Subsequently, POSCO, SAIL and MSPL joined the consortium considering favourable rate of return in the project.

The project, the first of its kind in the state and an alternative link between Cuttack-Paradip, will have 25 tonnage axle road covering 78 km from Haridaspur to Paradip.

The first phase of the railway project, which is to be developed on build, operate and transfer basis, is to be developed by March 2008.

Sources said 70 per cent of the land had been acquired and handed over to East Coast Railway for the purpose.

POSCO is expected to be benefited by the railway line as the distance between its proposed port at Jatadhari and its prospective mining site would be reduced by 40 km.

With the development of the broad gauge line, the transportation of iron ore and coal and import of coking coal would get a boost.

The state, which had so far been a major exporter of iron ore, would now receive a number of big investment proposals from steel makers.

As of now, the state has attracted nearly Rs 2,00,000 crore investment in the steel sector from 40 private companies and Paradip port has been the only major port available in Orissa coast.

First Published: Oct 07, 2006 19:24 IST