Indian Railways : Attracting Private Investments

Mukul Saran Mathur Executive Director

Public Private Partnership Ministry of Railways

India

Source : www.mapsofindia.com

IR – Network and Resources

• 65,808 Route Km

• Predominantly Broad Gauge (1676mm) – 58,177

km (86%)

• 33% of total route km Electrified (21,614 Km)

• 7,112 Stations

• 10,499 Locomotives

• 2,45,267 wagons & 66,392 coaching stock

including EMU’s & DEMUs

• 3 Passenger Car Manufacturing Units,2

Locomotive Manufacturing Units, 2 Wheel and

Axle Plant and 1 Locomotive Rebuilding Plant

• 1.33 Million Employees

IR – Role & Characteristic

• Lifeline of the nation – IR carries one third of the total freight traffic (tonne kilometers) of the country

It carries…

• 70% of all Coal

• 87% of all Fertilizer

• 81% of all Iron Ore

• 42% of all Cement

• 17% of all POL

• 20% of all Foodgrain

• Employs 1.33 million directly

• Complexity of Operations

• Intense Freight-Passenger interaction on common infrastructure

• High Density Corridor (Golden Quadrilateral + Diagonals) 16% of route Km carries

52% of passenger & 58 % of freight

• Electrified Routes (33%) carries 65% GTKM

Transportation Statistics (2013-14) – Freight Operations

• 1052 million Ton

• 666 billion NTKM

• Average lead -633 km

• Earnings of Rs 91,570 crore ( Euro 12.2billion )

– Passenger Operations

• Daily passenger 23 million

• 8397 million Originating Passengers

– 54% suburban, 46% non suburban

• 1158 billion Passenger KM

– 14% suburban, 86% non suburban

• 13,000 passenger trains per day

• Passenger Revenue of Rs 36,532 crore ( Euro 4.8 billion )

– Gross Revenue Rs 1,39,558 crore ( Euro 18.6 billion )

– Working Expenses Rs 1,30,320 crore ( Euro 17.3 billion )

Modal Share (Freight)

Dedicated Freight Corridors

to be commissioned by 2019

Eastern Corridor (1839 km)

7

3300 km Euro 11 billion

Strengthening the Logistic chain: Initiatives 2015

• Thrust to doubling projects ( 84% higher allocation)

• Additional 9400 km of critical projects of doubling to be taken up.

• Traffic Facility works and long loops

• DFC-750km of civil contracts and 1300 km of system contract in 2015-16

• Logistic corporation to be set up.

• Revamping Private Freight Terminal policy and Wagon Leasing/Investment schemes

• Longer loops

• Joint ventures with states and Central government Undertakings

• Adoption of Engineering Procurement Construction (EPC) mode for implementation

8

IR schemes for raising funds for

Infrastructure

Rail Connectivity/ Capacity

Augmentation

- Policy of participative

models

- Cost Sharing with States

Container Train

Operations

Container Train

Operators

Terminal Facilities

-Private Freight Terminals

-Station redevelopment

Other Assets

-Wagon Investment

Schemes

-Loco Factory

Rail Connectivity Projects implemented with private investment

• 54km Adipur- Mundra Port line constructed with full Private investments in 2002 (Private Line). Rs.150 crore + Rs.250 crore doubling ( Euro 53 million)

• 267 km Surendranagar-Pipavav GC commissioned through PRCL in 2003 (JV model). Railways Rs.98 crore + Rs.275 crore from non-Railway. ( Euro 37 million)

• 183 km Hassan Manglore GC commissioned through HMRDC in 2006 (JV model). Railways Rs.45 crore + Rs.107 crore from non-Railway+Rs 141 cr subordinated debt by MOR. ( Euro 15 million)

Rail Connectivity Projects implemented with private investment

• 301km Gandhidham-Palanpur GC commissioned through Kutch railway Company in 2006. Railways Rs.125 crore + Rs. 425 from non-Railway. ( Euro 57 million )

Doubling (247 kms) sanctioned at full cost by SPV at Rs 1267 crore (JV Model ) ( Euro 169 million )

• 62km Bharuch Dahej GC commissioned through Bharuch Dahej Rail Company Limited in March 2012 (JV Model). Railways Rs.55 crore + Rs.340 crore from non-Railway. ( Euro 45 million )

• First Phase (26km) of 112km Obulavaripalle- Krishnapatnam Port New line commissioned in 2009. (JV Model). Railways Rs.81 crore + Rs.1122 crore from non-Railway ( Euro 150 million)

• 64 km long Dhamra Port line constructed with private investments in 2012 (Private Line –Euro 101milion)

• Total Commissioned 950km -Railways Rs.400 crore + Non Railway Rs.2600 crore ( 13% from Railways ) (Euro 346 mill )

Rail Connectivity Projects being implemented with private investment

• 17 km Gandhidham-Tuna Port line to be commissioned by April 2015 (Private Line Model –Rs.142 crore)

• 82 km Haridaspur-Paradip New Line likely to be completed by Oct. 2016 (JV Model – Rs.1560 crore – Railways Rs.133 crore + Rs.1392 crore from non-Railway)

• 95 km Angul-Sukhinda New line (JV Model – Rs.1337 crore) - Railways Rs.189 crore + Rs.1148 crore from non-Railways)

• 35 km Jaigarh-Digni New line sanctioned in July’14, to be commissioned by 2017 (JV Model – Konkan Railway) - Rs.771 crore from non-Railway (Rs.50 cr equity by Konkan Railway from own resource)

• 35 km Roha- Dighi New Line at cost of Rs 724 crores

• Two coal line projects in Chattisgarh ( Raigarh-Mand and Gevra Road-Pendra Road) have been approved under JV with IRCON, State Government and SECL. Separate SPV for both projects have been formed for projects worth Rs 4000 crores

• Total Committed and sanctioned 793Km Non railway Rs 9557 crore, Railway-322 crore ( 3.3% from Railways ) (Euro 1.3 billion)

JV Performance Assessment PRCL:

• JV formed in 2000 implemented the project in 2003 at the cost of Rs 373 crore with railway share of Rs 98 crores.

• Manpower reduction from 2000 to 800

• Substantial investment for DSC operation

• Paid Dividend in 2013-14

HMRDC:

– JV formed in 2003 implemented the project in 2006 at the cost of Rs 366 crore with railway share of Rs 45 crore equity and Rs 141 crore debt.

– Co. invested Rs 68 in capital works after commissioning

– IR debt repaid substantially

KRCL:

– JV formed in 2004 implemented the project in 2006 at the cost of Rs 493 crore (Euro 66 mill ) with railway share of Rs 100 crore.

– Company paid dividend of Rs 71 crore till 2011-12

– Till 2011-12 Railway share of revenues was Rs 10500 crore (Euro 1.4 b )

– Invested in Doubling of line at the cost of over Rs 1200 crore. ( Euro 160 mill)

Rail Connectivity/Capacity Augmentation

• Participative Policy 2012 with five different model

1. Non Governmental Private line model

2. JV model

3. BOT through competitive bidding

4. Capacity Augmentation through Customer funding

5. Capacity Augmentation through – Annuity model

Non Governmental Railway Private Line

• Entire Private funding including land

• Train Operations by IR

• Maintenance and Station Operation by developer

• KPI – Average Speed

• Passenger train on mutual consent

• Infrastructure provider will get a user fee equal to 95% of revenue

Joint Venture Model

• To be implemented by formation of JV with Railways or its entity having a minimum of 26% equity.

• Land by JV or MOR at JV cost

• Construction and funding to be done by JV

• Normal concession period 30 years. (Flexible concession period)

• Operation by IR

• KPI-Average Speed

• User fee equivalent to 50% of apportioned revenue

Capacity Augmentation with Customer Funding

• Construction of line through funding by major customers/users who want such projects in full or part

• It is financing of a railway project through project advance with construction, maintenance, operation by Railways

• IR to return up to 7% of the amount invested through freight rebate every year till full amount is recovered with interest rate equal to dividend rate

Build Own Transfer (BOT )

• Concessionaire will Design, Build, Finance, and Maintain

• Viability Gap Funding from Government

• Train operation & revenue collection by IR

• Concessionaire to be given user fee equivalent to 50% of the apportioned freight revenue

• Normal Concession period will be 25 years with a traffic review after 20 years to increase or decrease the concession period

• 80% Projected Revenue Guaranteed

• Annual Escalation of projected Revenue

• Sharing of Revenue beyond 120%

Capacity Augmentation-Annuity Model

• Construction of Double Line/Third line/Fourth line where specific users are not identified.

• Award of concession through competitive bidding on annuity payment basis for financing and construction

• Annual premium is the bidding parameter

• Ownership of line with Railways

• Operation , Maintenance and revenue collection by Railways

Privatisation of Container Sector

• Private Operators permitted in 2006

• Container Growth around 12.8% since opening

• 17 operators apart from CONCOR

• New Operators have procured 128 rakes and developed 14 terminals with investment of approx Rs 5246 crore ( Euro 700 mill )

• CONCOR owns 249 rakes and 63 terminals and have invested approx Euro 700 million since opening of sector.

Private Freight Terminal (PFT)

• Terminals (green field or brown field) to come up only on private land and develop appropriate rail and other infrastructure.

• Can handle all traffic except outward coal and, coke.

• Can provide value added logistics related services

• Period of agreement for 30 years

• Revenue sharing to be paid to Railway Administration

• 56 proposals out of 21 commissioned.

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Wagon Investment Schemes

• 55 Rakes from 14 firms since the scheme issued in 2008

• Wagon Leasing Scheme : 12 rakes procured

• Automobile : 6 rakes procured

• Special Wagons: 3 tank wagon rakes procured

Station Development

• Developing identified stations to international standards with modern facilities & passenger amenities on lines of PPP airports

• Land and air-rights of station buildings to be leveraged

• To seek participation of private entities

• Joint Venture between IRCON and RLDA, to take up the work of redevelopment/development of Railway Stations as entrusted by Railway. Nine stations are planned to be taken up.

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FDI in Rail Sector FDI is recently permitted in construction, operation and

maintenance of the following:

• Suburban corridor projects through PPP.

• High speed train projects

• Dedicated freight lines.

• Rolling stock including train sets and locomotives/coaches manufacturing and maintenance facilities.

• Railway Electrification.

• Signaling systems.

• Freight terminals.

• Passenger terminals.

• Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivity to main railway line.

• MRTS.

Potential areas for Investment

• Suburban corridor projects through PPP

• High speed train projects – Both Infrastructure and Operating Companies can seek FDI

• Dedicated freight lines –Port/Mining lines can be developed

• Rolling stock including train sets and locomotives/coaches manufacturing and maintenance facilities -manufacturing and maintenance facilities can be set up outside IR.

• Railway Electrification – Manufacturing companies of such systems including power transmission companies

• Signaling systems –Manufacturing companies of such systems and companies specializing in installation of signaling solutions .

• Concessioning of Branch lines • Freight terminals & Logistic Parks–Improvement of

Terminals and managing freight terminals. • Passenger terminals • Non Conventional sources of Energy- Companies

specializing in producing solar/ wind power

Potential areas for Investment

• Testing facilities &Laboratories • Technical Training Institutes • Technological Solutions for safety

enhancement at Level Crossing Gates • Technological Solutions for Safety Enhancement • Installations of Bio-toilets/ Rolling Stock

Procurement/ Mechanized Laundry

Potential areas for Investment

Thank you

ms.mathur@gmail.com