Railways’ coalition ventures
10 June 2013
PPPs or Pubic Private Partnerships, being touted by the Planning Commission as the way to go for all kinds of projects, is what had helped the British build over 40,000 miles (64,000 km) of rail network in the Indian sub-continent by the turn of the 20th century.
A 5 per cent return on investment and free land guaranteed by the then government in power was incentive enough for scores of private companies incorporated in Britain to scramble for building rail lines.
These lines were mostly from major ports like Bombay (now Mumbai), Calcutta (now Kolkata) Madras (now Chennai) and Karachi into the vast hinterland.
Simultaneously, tracks were built from Lahore and Delhi to connect the all important north frontier border post of Peshawar to the then seat of power viz. Calcutta. From just under 3,200 km, the route length increased to over 40,000 km by 1902, providing the general public a means of fast and cheap transport across the Indian subcontinent. More importantly, it helped the British move troops to keep tabs on the restless natives!
EIR (East Indian Raillways) with headquarters in Calcutta; GIPR (Great Indian Peninsula Railway) based in Bombay; North Western Railway based in Lahore; M&SM Railway (Madras & Southern Marhatta Railway) in Madras; and BB&CI (Bombay Baroda & Central India Railway) based in Mumbai were some of the major companies that came into being and ran the vast rail network. In the 1950s, these, along with scores of State-owned and private entities got re-organised into 6 zonal railway divisions, which later increased to 9 and now 17.
Post independence, it was perhaps George Fernandes who resorted to the joint-venture route to finance a railway project ~ the 720 km-long Konkan Railway that connected Mangalore to Mumbai via Roha, bringing the West coast into the national mainstream.
As the Minister for Railways in 1989-90, he met the Chief Ministers of Maharashtra, Goa, and Karnataka, all from varied political parties, successfully cajoling them to participate in the proposed equity in proportion to the length of the line that passed through their respective territories, and would ultimately help expedite their economic growth.
He even roped in Kerala, though the line ended at Mangalore, just short of Kerala’s border. The clinching argument was that it would shorten, by almost one-third, the arduous journey from the state to Mumbai via Arkonam junction.
Targeted for completion by October 1994, the initial equity capital of KRC (Konkan Railway Corporation) of Rs 250 crore was shared between the Ministry of Railways (51 per cent) and the four beneficiary states ~ Maharashtra (22 per cent), Karnataka (15 per cent), Goa and Kerala (6 per cent each).
Selection of E Shreedharan as the chairman-cum-managing director of the ambitious project was a wise choice that may be credited to Fernandes. As former Member-Engineering, Railway Board, Shreedharan not only brought with him years of experience in railways and civil engineering, but also a team of dedicated officers and supervisors who could be relied upon to work as a cohesive team.
By 2001, the Railways had realised that it would never be able to generate enough funds to keep pace with the demands for new over bridges, level crossings, lines, gauge conversion and doubling, among other things; hence, states were roped in a la KRC.
Going half-way was an option which states were willing to adopt and soon this became the norm for all projects, even those that had already been sanctioned and were in the pipeline, but work had not been taken up for paucity of funds.
Some of the major projects that ultimately came to be executed under this route are: conversion of the 275 km-long meter gauge Surendranagar-Bhavnagar line to broad gauge through a joint-venture between the Railways and Gujarat through the creation of PRCL (Pipavav Rail Corporation Ltd); conversion of 183 km of metre to broad gauge from Hasan to Mangalore through HMRDC Ltd (Hassan Mangalore Rail Development Corporation).
New Mangalore Port Trust (NMPT) and Mineral Enterprises Ltd (MEL) also participated in HMRDC as strategic partners, along with Rail Infrastructure Development Company (Karnataka) Ltd. (K-RIDE); HMRDC was also granted rights to carry on the business of development, establishment, financing, construction, operations, maintenance and management of the Hasan-Mangalore railway link for 32 years, providing an opportunity for stake-holders to make it a profitable and successful venture.
Gauge conversion for the 301 km-long Gandidham-Palanpur line was done by Kutch Railway Corporation Ltd (KRCL) in collaboration with Western Railway, the government of Gujarat, KPT (Kutch Port Trust) and MPSEZ (Mundra Port Special Economic Zone); it was completed in 2006. KRCL has already repaid its entire debt and is now poised to finance doubling of the 271 km broad gauge alignment from Samarkhilai to Palanpur through its own earnings.
The government of Gujarat also foot part of the bill for the 62 km-long Bharuch-Dahej link, which was completed only last year. It provides the Dahej port on the West coast with valuable rail connectivity. On the other hand, Reliance Industries is planning to participate in the Rewas port connectivity project through a 74 per cent stake.
The 113 km-long new line from Krishnapattanam port on the East coast to Obulavaripalle ~ part financed by government of Andhra Pradesh ~ is still under construction. Though 21 km of the line has been constructed, it has already started yielding rich dividends.
When completed till Obulavaripalle, it will find itself connected to the Mumbai-Chennai sector of the golden quadrilateral, boosting its potential. It will provide an alternative to the Visakhapatnam and Kakinada ports of Andhra Pradesh on East coast.
The Rs 735-crore Haridaspur-Paradip new railway line project, now on the drawing board, has the Aditya Birla group and government of Odisha as equity partners. The line would shorten by 40 km the existing route from Banspani to Paradip port, providing an alternative and faster route for export of iron-ore.
The writer is former Member, Railway Board