Railways is taking highway development model route to implement its mega infrastructure projects.
The Union railway ministry has come out with five participative models of rail connectivity and domestic and foreign direct investment. Of these, build, operate and transfer (BOT) – used prominently for the highway construction through private participation – will be applied for two projects in Mumbai worth Rs 77,000 crore.
The two projects that will be implemented on BOT model are the Rs 14,000 crore Chhatrapati Shivaji Terminal – Panvel suburban corridor spanning 49 km, and Mumbai – Ahmedabad high-speed corridor worth Rs 63,180 crore. This means that Rs 77,000 crore worth contracts are up for grabs for the private sector, which has an opportunity to build and earn from the project for the next 25 years and return the project to the government after taking their return on investment (RoI).
"Under this model, the concession will be awarded through competitive bidding. The concessionaire will design, build, finance, construct and maintain the project line for a concession period of 25 years, subject to variation based on actual traffic materialisation vis-à-vis threshold traffic indicated at the time of bidding," the ministry document explaining the model said.
This means that the projects that the revenue from the projects bid out under this model will go to the private developer for at least 25 years, or until it earns its RoI.
A senior railway ministry official told dna, "Viability gap funding and premium will be the basis on which the project will be awarded to the private concessionaires." Viability gap funding in this case will be 20% of the project cost. Railway ministry will provide land at a nominal fees of rupee one per annum.
The other four models of railway infrastructure development are private line model, joint venture model, customer funded model and engineering procurement contract model for various types of projects. Sea ports, large mines, logistic parks, and other industrial clusters which require efficient rail connectivity can go in for this model.
"The rail connectivity to such utilities/clusters could be developed by the owner/concessionaire of the facility as private railway line by acquiring land and making investment in the line," said the document.
On the joint venture, the document said, "In some railway projects, sanctioned or proposed to be sanctioned, it may be possible to identify interested stakeholders who may participate in funding to expedite execution. Such projects can be implemented through formation of a joint venture with equity participation by strategic investors."
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