The Indian Railways has identified the first three projects to be taken up for development through the new build, operate, transfer (BOT) annuity model at an estimated cost of around Rs 2,450 crore.
The three targeted projects are developing third line between Nagpur and Wardha (both in Maharashtra), Kazipet (Telangana) and Balharshah (Maharashtra) and, Bhadrak and Nergundi (both in Odisha), a senior Railways Ministry official said. The total estimated cost of development of 357 km third line is around Rs 2450 crore.
“We are aiming to take up these three third line projects under the BOT annuity model. We have appointed financial consultant for two projects already. The first project will be launched in three months from now,” said a senior Railways Ministry official on condition of anonymity. The Railways has received Rs 14,000 crore worth investment commitments since 2014 after it introduced new models for projects through public-private partnership (PPP) model, the official added.
“This is a sharp rise from roughly around Rs 4,000 crore investments generated in 2002-2012. In the last three years, we were able to generate more than three times,” said the official.
Under the BOT annuity model for rail projects, the private developer gets a revenue guarantee of 80 per cent of projected revenue at the time of bidding.
The developer gets a full right to revenue between 80 and 120 per cent and the Indian Railways do not take any share from it.
It is only when the actual revenue is above 120 per cent, the additional receipts are shared with the Indian Railways in a staggered manner, the official added.
To attract private investments in railways, the government had framed five models – non-government private line model, joint venture model, BOT model, capacity augmentation with funding provided by customers model and capacity augmentation through annuity model.
While five projects to be developed through PPP model have got in-principle clearance, 27 other projects are under implementation, the official said.
Facing a resource crunch, Railways is focusing on raising funds through various channels, including the PPP route and forming joint ventures with the state governments. Recently, the Railways’ gross budgetary support was slashed by Rs 8,000 crore citing lack of spending by the national transporter.
The Railways face an additional burden of Rs 32,000 crore towards implementing the Seventh Pay Commission's recommendations.
