SPV for Bengaluru Suburban Rail yet to take off as State Govt and Railways are yet finalise on Cost Sharing

A year after MoU, suburban rail SPV yet to take off. While the Railway Board is yet to decide on cost sharing, the state government seems to be in a bind over financing old projects sanctioned by the railways.

BENGALURU: The special purpose vehicle (SPV) to implement the suburban railway is yet to take off as the state government and railways are yet to see eye to eye on some pertinent issues.

More than a year after signing a memorandum of understanding (MoU) to build a suburban rail network in the city, the SPV, which has to drive the project further, has remained at the level of discussions. While the Railway Board is yet to decide on sharing costs, the state government seems to be in a bind over financing old projects sanctioned by the railways.

In April, the state government urged the railways not to include two doubling works (Baiyappanahalli-Hosur and Yeshwantpur-Channasandra) worth Rs 546 crore in the project. The Railway Board replied last month “requesting” the state to share 50% of the cost.

“We requested them to exclude these works considering that they were old projects sanctioned in the railway budget. The government will reconsider the railways’ request,” said Department of Urban Land Transport (DULT) commissioner Darpan Jain.

Besides, the state government is yet to make necessary changes in the Karnataka Rail Infrastructure Development Corporation (K-RIDE) as requested by the railway board. “Decisions will be taken after seeking the opinion of the law and finance departments,” the official said.

The Railway Board has not yet decided on sharing 50% of project cost. According to the state government’s proposal, the SPV will be formed with 40% equity and 60% borrowings which have to be equally shared between the state and central governments. The proposal is “under examination”, according to a June 2 letter.

In January, Railway Minister Piyush Goyal gave a push to the project when he promised to increase the Centre’s share from 20% to 50% of the project cost if the state increases the floor area ratio of railway land in the city.

The state government agreed in April and sought exclusion of the two doubling works as well as “the works taken up under the state government’s recent sanction of Rs 1,745 crore”.

Railway officials refused to comment on the issue stating that they were yet to get a reply from the state government. A senior official in the state government said several meetings have been held, including with the Chief Secretary, to thrash out issues. “A meeting with three departments will be held next week to take a decision. We will reply to the Railway Board’s proposal soon,” he said.