Railways seeks $500mn loan from World Bank to undertake redevelopment projects

World Bank to be Anchor Investor in Rail Development Fund. Around 400 Stations have been identified which will have improved passenger amenities, shopping malls, multiplexes, office complex, eateries and larger parking lots.

Indian Railways World BankNew Delhi: Indian Railway will seek USD 500 million from World Bank for undertaking redevelopment of some major stations as part of its ambitious station development plan.

Altogether 403 stations have been identified for redevelopment in a big way with improved passenger amenities including shopping malls, multiplexes, office complex, eateries and larger parking lots using vast land in possession of the public sector transporter.

Station development is a focus area for the cash-strapped behemoth and concerted efforts are being made to firm up a roadmap for it, said a senior Railway Ministry official involved with the station development project.

He said a proposal for seeking a loan of USD 500 million from World Bank with a moratorium of 7 years for undertaking redevelopment of some key stations is under process.

Besides, railways is also in discussion with some foreign entities to benefit from their expertise in developing stations.

While French Railway (SNCF) has been given Ambala and Ludhiana stations for redevelopment, the public transporter is also in talks with Germany and South Korea for some other stations.

According to the official, railways is exploring the possibility of involving South Korea for redeveloping the New Delhi station as a world class station.

The Indian Railway Stations Development Corporation (IRSDC) has been tasked with redeveloping eight stations – Habibganj, Bijwasan, Anand Vihar, Chandigarh, Shivaji Nagar, Surat, Gandhinagar and Mohali.

As a large number of stations are to be redeveloped, various modes and strategies are being planned, the official said.

A cabinet note has been initiated to entrust three identified stations to National Building Construction Corporation (NBCC), a Public Sector Undertaking under Urban Development Ministry on nomination basis. The cabinet note has been sent for inter-ministerial consultations, sources said.

Rail minister Suresh Prabhakar Prabhu had floated the idea of the fund after a visit to Washington DC in January 2016. Prabhu had told Business Standard in an exclusive interview last month the bank had expressed confidence in the railways’ ability to spend money judiciously.

“The corpus of that fund is yet to be decided but it may not be used only for Indian Railway projects and would be channelised for all rail-based projects including even Public Private Partnership (PPPs),” he had said.

The World Bank is understood to have given its in-principle approval for the creation of the fund and the proposal is now with the Department of Economic Affairs (DEA). “We are ready with the basic structure. We will take it forward once other formalities are in place,” a senior rail ministry official said.

Another official close to the development said the fund to be created with World Bank as the anchor investor will be part of the government’s effort towards additional mobilisation of resources as the Gross Budgetary Support (GBS) extended by the finance ministry is not sufficient.

“There is a limit to the extent to resources that can be utilised through GBS. While the ministry will always continue to source more GBS, efforts like the World Bank fund would form a key part of the Extra Budgetary Resources,” he said.

GBS is the centre’s financial assistance extended to railways and forms an important component of the Central Plan of the government. The railways receives resources to the tune of around Rs 40,000 crore annually in the form of GBS from the finance ministry and pays dividend to the centre.

The World Bank fund will be part of the efforts to attract commercial finance for financially-viable railway infrastructure projects in India. The Indian Railways plans to invest Rs 8.5 lakh crore over the next five years including Rs 1.21 lakh crore in the current fiscal.

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