Business & Economy

Railways sign MoU with Telangana govt. for JVs for rail infrastructure

NetIndian News Network

New Delhi, February 11, 2016

The Ministry of Railways today signed a memorandum of understanding (MoU) with the Telangana Government for formation of joint venture (JV) companies for the development of railway infrastructure in the state.
The MoU was signed on behalf of the Ministry of Railways by Mr.  Ved Prakash Dudeja, Executive Director/Works, and on behalf of the Government of Telangana by Mr. Sunil Sharma, Principal Secretary, Department of Transport, Roads & Buildings.
Railway Board Chairman A. K. Mittal, other Members of the Board and Dr. Shashank Goel, Resident Commissioner, Telangana, were amongst those present on the occasion.
The MoU was signed in the backdrop of the Railway Minister's Budget announcement regarding setting up of JVs with States for focused project development, resource mobilization, land acquisition, project implementation and monitoring of critical rail projects.
Mr. Mittal said the Railways had a big shelf of projects valued at about Rs. 3.5 lakh crore. He said 17 States had already agreed to form JV companies with the Railways and five -- Andhra Pradesh, Kerala, Maharashtra, Chhattisgarh and Odisha -- had already signed MoUs in this regard.
The MoU envisages formation of JV companies having 51% stake of the respective State Government and 49% stake of the Ministry of Railways. The companies will identify projects and possible financing avenues. After finances for a project are tied up, project specific special purpose vehicles (SPVs) shall be formed. These SPVs can have other stakeholders from industries, Central PSUs, State PSUs, and so on.
However, the JV companies shall be  mandatory stake holders with minimum 26% shares in the SPVs.
The Ministry of Railways will sign a concession agreement of 30 years with the project SPV for safe and sound operation, revenue sharing and providing technical & marketing logistics to the SPV. The revenue sharing shall be based on already established formula being used for inter zonal apportionment of revenue.