The Indian Railways on Wednesday entered into two separate agreements with Kerala and Andhra Pradesh for the formation of joint venture companies (JVCs) with state governments. According to the Ministry of Railways, it signed two separate Memoranda of Understanding (MoU) with the state governments as part of it's budget plans. The MoU envisages formation of JVCs having a 51 percent stake of the state government and a 49 percent stake of the railway ministry. Under the Mou, JVCs formed with state governments will focus on project development, resource mobilisation, land acquisition, project implementation and monitoring of critical rail projects. On the occasion, Railway Minister Suresh Prabhakar Prabhu said the railways have a large shelf of ongoing new lines, gauge conversions and doubling projects.
He elaborated that the development projects need about Rs.3.5 lakh crore to complete and thus formation of JVCs with state governments will go a long way in faster commissioning of critical rail infrastructure. “After finances for a project are tied up, a project specific special purpose vehicle (SPV) shall be formed. This SPV can have other stakeholders from industries, central PSUs, state PSUs,” a ministry statement said. “However, the JV company shall be a mandatory stakeholder with minimum 26 percent shares in the SPV.”
Besides, the ministry will sign a concession agreement of 30 years with the project SPV for operation, revenue sharing and providing technical and marketing logistics. Besides, the MoU entails the land ownership with the SPV. Thus, providing it with financial leverage to exploit the commercial potential of the land. Earlier, the Indian Railways signed MoUs for the formation of the JVCs with Maharashtra and Odisha. Currently, 17 state governments have agreed to the formation of JVCs for development of rail infrastructure in their respective states