Railways may put 30,000 km of Power Lines on the block

NEW DELHI: In a major disinvestment initiative that follows New Delhi’s decision to dilute its Air India ownership, the Centre is considering a proposal to put on the block about 30,000 km of Indian Railways power lines, potentially fetching the national transporter Rs 1 crore for each kilometre of infrastructure.

With the likely upfront receipts of Rs 30,000 crore, the Indian Railways will take on projects that deliver higher returns.

Apart from state-run power companies, private-sector firms and pension funds will also be allowed to bid for these power lines, a senior government official told, detailing broad points of the proposal. “It is being deliberated. The idea is that the railways will take these lines on lease and pay a fixed interest to the owner,” he said.

According to the initial plan, the railways will continue to manage the operations and maintenance (O&M) function of these power lines.

“The O&M will be handled by our engineers. The funds raised through this sale will be utilised in projects that have a return of more than 12%,” a top railway official said.

Another official said that some discussions have been held with state run power companies and that the railways may be comfortable paying about 7% by way of interest.

“If this works out as envisaged, we will go for monetising other assets such as railway corridors, railway stations and trains,” he added.

Such transactions are common in the aviation industry. Airlines sell their aircraft and then lease them back, essentially swapping fixed costs for a variable one.

In an interview with in September, railway minister Piyush Goyal had said that he was planning to monetise the existing railway assets to arrange funds for modernisation. Experts are of opinion that Indian Railways must fend for itself, given the fiscal constraints.

“The Indian Railways is sitting on a massive asset base, including the land bank and transmission lines. Since the private sector is demonstrating a distinct appetite for the transmission grid, it will be a very successful off-budgetary mechanism for the railways,” said chairman of Feedback Infra, Vinayak Chatterjee.

The national transporter currently has half of its total network electrified, and is planning to move the rest onto electric power in the next four years at a cost of about Rs 35,000 crore.

According to the railway development plan prepared by the Narendra Modi government, the national transporter will require an investment of Rs 8 lakh crore in the next five years. About half of it is likely to come from the gross budgetary support from the finance ministry. The remaining funds would have to be arranged by the railroad company from its own sources, or through borrowings from institutions such as the Life Insurance Corporation of India.

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