Coal India to form JV with Indian Railways to evacuate Coal

New Delhi: Coal India (CIL) is likely to sign a major joint venture agreement with the Railways soon for co-developing a number of railway projects to evacuate coal.

As per the proposed terms of the joint ventures, whose terms are being finalised, while cash-flush CIL would bring in the money, fund-starved Railways would provide the sweat-equity creating the infrastructure, including the tracks, sidings and related infrastructure needed to evacuate coal from hard-to-reach mines and bring it to power plants and other industries, sources told.

The concept of forming a joint venture has been jointly conceived by Union railway minister Suresh Prabhu, who has been working hard to raise Railways’ share of coal transport, and CIL chairman Sutirtha Bhattacharya, who has previous experience of working on similar projects for the Krishnapatnam Rail Co.

While Prabhu was willing to sign the pact on April 1, the actual signing might get delayed for few days.

“The terms are being worked out. We will disclose when it is finalised,” CIL Chairman told when contacted.

CIL has been looking at a comprehensive revenue-based partnership with Railways in a bid to create mega infrastructure for which about 50 separate projects across the country have already been identified, had earlier reported.

The partnership model, which has finally been zeroed in involves the Railways building the infrastructure using funds provided by CIL. The model is being seen as a win-win proposition for both the entities: While Railways would earn revenue without any capital investments, CIL would get freight discounts and first right to way.

While several projects have been identified, of immediate priority would be three specific projects including a 90-kilometre stretch linking Tori-Shivpur-Kathautia connecting the North Karanpura mines in Jharkhand, Jharsuguda-Barpalli-Sardega in Odisha and Bhupdeopur-Raigarh-Mand in Chhattisgarh, sources said.

CIL is likely to put in investments worth about Rs 4,000 crore in these three projects with Railways executing the lines.

Till now, Railways have in a small way partnered with its customers forming about eight special purpose vehicles on cost-sharing basis, including two with CIL, three with several cement companies and one each with NTPC, NMDC and Rajasthan State Mines and Minerals for an aggregate length of 708 kilometres involving an investment of Rs 4,300 crore.

Its proposed joint venture with CIL is expected to be more comprehensive and formalised helping the monopoly coal miner to double its production from the current levels to 1 billion tonne by 2020.