Railways gears up to undertake largest ever divestment exercise

NEW DELHI: Indian Railways is ready to undertake its largest ever divestment exercise as the ministry has set a target of raising at least Rs 25,000 crore through monetisation of its power transmission lines, also known as overhead equipment network.

The proposal was mooted in the last fiscal but could not make much progress because of reservations from senior officials in the ministry. But the railway minister has now cleared it and the proposal would soon be taken up for approval by the rail board after which it will go to the union cabinet for its consent.

Indian Railways has an operational electrified network of 25,000 route km. Electric locomotives draw power from these lines to run trains.

According to a railway ministry official, a joint venture of the two public sector units would be set up that would buy these lines. “One of the PSUs will be of the railway ministry and the other one could be from the power ministry.

The JV would pay railways upfront and the national transporter will take these lines on lease and pay a fixed interest to the owner,” said the official.

“Railways will continue to manage the operations and maintenance (O&M) of these power lines, and it may be comfortable to pay around 7% as interest rate,” he said.

“Earlier, there were several reservations related to the proposal as such kind of divestment has never been undertaken by the railways. Also, we were apprehensive if the rail unions would agree to it. But now the air has been cleared and we are hopeful of going ahead with the proposal soon,” the official explained.

In the current financial year, the ministry is hoping to raise Rs 27,000 crore through non fare box that mostly includes monetisation of assets, including the land bank. The money raised would be spent towards electrification — almost 100% — of the railway network. There is still more than 30,000 km of railway network that is yet to be brought under electrification.

Indian Railways is hoping to electrify all major routes in the next five years. Railway minister Piyush Goyal had said recently said that through optimum electrification of railway network, the national transporter could save about Rs 11,000 crore in fuel cost.

The revenue target for the Indian Railways for the current financial year has been set at Rs 2 lakh crore out of which aroundRs 1.73 lakh crore is expected to come from the freight and passenger earnings whereas the rest would come from commercial exploitation of assets. The ministry has also lined up several land parcels for monetisation in the current financial year.