Memorandum of Understanding (MoU) signed between Ministry of Railways and Governments of Chhattisgarh

The Union Minister for Railways, Shri Suresh Prabhakar Prabhu and the Chief Minister of Chhattisgarh, Dr. Raman Singh witnessing the signing ceremony of an MoU between Ministry of Railways and State Government of Chhattisgarh for formation of JV Company, in New Delhi on February 09, 2016.

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Memorandum of Understanding (MoU) signed between Ministry of Railways and Governments of Chhattisgarh for “Formation of Joint Venture Companies for Development of Railway Infrastructure in Chhattisgarh State

Augmentation of New Railway Lines in Chhattisgarh State will help explore full potential of natural resources of Chhattisgarh : Suresh Prabhu

New Initiative To Help Improve Transportation System in Chhattisgarh : Raman Singh

In the august presence of Minister of Railways, Shri Suresh Prabhakar Prabhu and Chief Minister of Chhattisgarh Shri Raman Singh, Memorandum of Understanding (MoU) between Ministry of Railways and State Government of Chhattisgarh for “Formation of Joint Venture Companies for Development of Railway Infrastructure in the State of Chhattisgarh” was signed.  On the event of Signing Ceremony, Chairman Railway Board Shri A. K. Mital, Member Engineering Shri V. K. Gupta, Member Staff Shri Pradip, Financial Commissioner Shri S. Mookerjee and other Board Members and other Senior Officials were present. On behalf of the Railway Ministry Shri Ved Prakash Dudeja, Executive Director/Works signed the MoUs whereas on behalf of Government of Chhattisgarh Shri Subodh Kumar Singh, Secretary, Department of Commerce & Industry, Govt. of Chhattisgarh signed the MoUs. The MoU was signed in the background of Railway Minister’s Budget announcement regarding setting up of Joint Ventures with States for focused project development, resource mobilization, land acquisition, project implementation and monitoring of critical rail projects.

 Speaking on the occasion, Union Minister of Railways Shri Suresh Prabhakar Prabhu thanked the Govt. of Chhattisgarh for having agreed to set up JV Company in State of Chhattisgarh. He further said that the Indian Railways has been working vigorously to reach every corner of the Country through railway lines but people’s expectations are lot more with Railway Ministry.  He said that to meet the demands of the country’s people, all State Governments will have to join hands with Railway Ministry and with their becoming partner with the Railway Ministry this will become possible.

Shri Suresh Prabhu further stated that the Chhattisgarh is a State which is full of natural resources such as coal etc. Chhattisgarh has lot of potential and the exploration and evacuation of its natural resources to other parts will help the whole country at national level.  For this purpose, railway infrastructure needs to be developed in the State which will not only help the people of the State in availing better transport but will also bring huge freight to the Railways. He stated that working through JV Companies will bring Railways to Ground Zero for effective implementation. He hoped early completion of formation of JV Companies in the interest of the country.

In his address, Shri Raman Singh, Chief Minister of Chhattisgarh at the outset thanked Ministry of Railways for supporting the State of Chhattisgarh for development of New Railway Infrastructure.  He said that Railway Ministry already did commendable work in Bastar and Saguja District of Chhattisgarh by developing new railway lines which helped Chhattisgarh State a lot.  He stated that under the energetic leadership of Shri Suresh Prabhu Railways has been progressing day in and day out. He stated that 760 kilometers additional railway lines have been spread in the State of Chhattisgarh in a very short span of time which in itself is a record.  He stated that this new initiative will not only improve transport system of Chhattisgarh State but also help the State in exploring its full potential in better perspective.

Salient Features of the MoU:-

  • In view of the growing demands for railway lines in various states and huge requirement of funds to execute them, Minister for Railways announced in his budget speech regarding setting up of Joint Ventures with states for focused project development, resource mobilization, land acquisition, project implementation and monitoring of critical rail projects.
  • 17 State Governments consented for formation of Joint Venture Companies in collaboration with the Ministry of Railways for development of rail infrastructure in their respective States. Draft MoUs were sent to these State Governments and discussions were also held with them to clarify various provisions of the MoU.
  • MoUs have already been signed by the Ministry of Railways with the State Governments of Odisha, Maharashtra, Kerala and Andhra Pradesh.
  • Today, MoU has been signed with the State Governments of Chhattisgarh. This signing of MOU is going to be a stepping stone for formation of JV companies.
  • The MoU envisages formation of a Joint Venture companies having 51% stakes of the respective State Government and 49% stakes of Ministry of Railways. Thus, the JV companies shall be fully owned by the Government. The companies will primarily identify projects and possible financing avenues in addition to Govt of India and the State Government. After finances for a project are tied up,  project specific SPVs or special purpose vehicles shall be formed. These SPVs can have other stake holders from Industries, Central PSUs, State PSUs etc. However, the JV companies shall be  mandatory stake holders with minimum 26% shares in the SPVs.
  • The ministry of Railways will sign a concession agreement of 30 years with the project SPV for safe and sound operation, revenue sharing and providing technical & marketing logistics to the SPV. The revenue sharing shall be based on already established formula being used for inter zonal apportionment of revenue.
  • The most important aspect of this MoU is that the ownership of the land shall vest with the SPVs which is a departure from previous practice. This will give financial leverage to the company to exploit commercial potential of the land. This is likely to result in making project viable which are otherwise not viable.
  • At the end of concession period, the railways will have option to take over the assets at a nominal price. This is largely in line with average codal life of the assets as most of the assets will need large scale replacement after 30 years.
  • Indian Railways has been playing a major role in national integration by connecting the remotest places and bringing people closer to each other. Railways receive a large number of demands for network expansion as a railway line acts as an engine of growth for the area it serves.
  • However, Railways have a large shelf of ongoing New Line, Gauge Conversion and Doubling projects needing about Rs 3.5 lakh crores to complete. We have been trying to meet the aspirations of public within limited availability of funds.
  • To expedite the projects, Railways have been trying to mobilize resources through other than Gross Budgetary Support. However, on the initiative of  Minister for Railways Sh. Suresh Prabhu, Indian Railways have tied up funds for critical capacity enhancement project of doubling, third line , electrification etc. An MoU was signed with LIC of India and we have already taken first tranche of Rs 2000 Cr for these projects. This tied up loan will ensure dedicated and assured funding for such critical projects.
  • Indian Railways have targeted to commission 2000 Km New Lines, 4000 Km Gauge Conversion and 11000 Km Doubling/Tripling/ Quadrupling projects over 5 years i.e. from 2015-16 to 2019-20. In 2015-16, we had kept quite ambitious target of commissioning 2500 Km Broad Gauge track. It is a matter of great satisfaction that we are poised to not only achieve these targets but to surpass them. We have already commissioned about 1300 Km Broad Gauge track till December, 2015 against 800 Km track commissioned in the corresponding period of the previous year (Due to monsoons, major commissioning takes place in the last quarter of the financial year).
  • Formation of Joint Venture Companies with the State Governments will go a long way in faster commissioning of critical rail infrastructure projects as it will not only help in mobilization of funds but also in facilitating various clearances and land acquisition.