Talks again of seriousness on 2020 vision, but not much on why this mode hasn’t taken off
PPP (public-private-partnership) projects is a subject on which railway minister Mamata Banerjee has again sounded optimistic. The idea has made its way into the railways’ annual plan for 2011-12.
External financing through PPP and WIS (the wagon investment scheme) is expected to yield Rs 1,776 crore, the annual plan in the Railway Budget said. Single-window clearance for PPP projects has been reiterated, to hasten the process.
This is although rail PPP projects have yet to take off in any significant manner. Still, Banerjee peppered her rail budget speech with references to Vision 2020, to suggest that industry was eager to participate in such ventures. Vision 2020, presented to the Parliament in December 2009, spoke of generating Rs 14 lakh crore worth of investment by year 2020, and that PPP would be a vehicle for doing so.
On Friday, Mamata said, “During this year, we met industry leaders to encourage investment” in areas which included infrastructure. The ministry, she stressed, wanted PPP projects in areas related to infrastructure. “With this objective, the Railways have developed several business-oriented policies for the first time,” she said. The policy initiatives include Railways’ Infrastructure for Industry Initiative, where PPP would be encouraged. Other projects mentioned in this connection were automobile and ancillary hubs, and cold chains, called Kisan Vision. Mamata assured the House on Friday that if Vision 2020 was to be followed, results would be positive. “I believe in positive approach and action.”
Not enough
Abhaya Agarwal, Executive Director & PPP Leader, Ernst & Young, said, “The budget follows the incremental approach of Indian Railways. More concrete steps would be required to realise Vision 2020.” According to Agarwal, the high operating ratio shows the perilous health of rail finances, which requires immediate attention. Adding, “The new projects like captive power generation can be easily developed through PPP, thus allowing Indian Railways to invest in its core areas.”
The government has ambitious plans of transforming the country’s transport infrastructure through private participation. Originally, private investment for the 11th Plan period (2007-12) was projected at Rs 211,600 crore in the three transport sub-sectors of rail, road and airports. It has been brought down by 60 per cent, to Rs 86,700 crore. The railways stayed away from privatisation for years.
The Planning Commission recently brought down the expected private investment of Rs 50,354 crore, which accounted for 20 per cent of the overall investment of Rs 261,800 crore in the railways for the current Plan period, by as much as 83 per cent to Rs 8,316 crore. Although the PPP model for infrastructure projects has been a major success in telecom and highway development projects, it has failed to impact the rail sector, despite the ministry coming out with several policies aimed in that direction.
Prime Minister Manmohan Singh had also recently spoken on the significance of PPP for infrastructure projects.
In the railways, the government retains ownership, but gets into partnership with private players for improving facilities at railway stations, for instance. Projects on offer through PPP include new engine manufacturing units at Marhoura and Madhepura in Bihar, high capacity freight bogie manufacturing factories at Dalmianagar in Bihar and Majerhar in West Bengal and the Son Nagar-Dankuni section of the Dedicated Freight Corridor.
PPP projects have failed to take off in the railways as industry has not responded well to the model agreements formulated by the ministry. Also, the railways’ insistence on majority stake in each projects have held up their awards.
PPP (public-private-partnership) projects is a subject on which railway minister Mamata Banerjee has again sounded optimistic. The idea has made its way into the railways’ annual plan for 2011-12.
External financing through PPP and WIS (the wagon investment scheme) is expected to yield Rs 1,776 crore, the annual plan in the Railway Budget said. Single-window clearance for PPP projects has been reiterated, to hasten the process.
This is although rail PPP projects have yet to take off in any significant manner. Still, Banerjee peppered her rail budget speech with references to Vision 2020, to suggest that industry was eager to participate in such ventures. Vision 2020, presented to the Parliament in December 2009, spoke of generating Rs 14 lakh crore worth of investment by year 2020, and that PPP would be a vehicle for doing so.
On Friday, Mamata said, “During this year, we met industry leaders to encourage investment” in areas which included infrastructure. The ministry, she stressed, wanted PPP projects in areas related to infrastructure. “With this objective, the Railways have developed several business-oriented policies for the first time,” she said. The policy initiatives include Railways’ Infrastructure for Industry Initiative, where PPP would be encouraged. Other projects mentioned in this connection were automobile and ancillary hubs, and cold chains, called Kisan Vision. Mamata assured the House on Friday that if Vision 2020 was to be followed, results would be positive. “I believe in positive approach and action.”
Not enough
Abhaya Agarwal, Executive Director & PPP Leader, Ernst & Young, said, “The budget follows the incremental approach of Indian Railways. More concrete steps would be required to realise Vision 2020.” According to Agarwal, the high operating ratio shows the perilous health of rail finances, which requires immediate attention. Adding, “The new projects like captive power generation can be easily developed through PPP, thus allowing Indian Railways to invest in its core areas.”
The government has ambitious plans of transforming the country’s transport infrastructure through private participation. Originally, private investment for the 11th Plan period (2007-12) was projected at Rs 211,600 crore in the three transport sub-sectors of rail, road and airports. It has been brought down by 60 per cent, to Rs 86,700 crore. The railways stayed away from privatisation for years.
The Planning Commission recently brought down the expected private investment of Rs 50,354 crore, which accounted for 20 per cent of the overall investment of Rs 261,800 crore in the railways for the current Plan period, by as much as 83 per cent to Rs 8,316 crore. Although the PPP model for infrastructure projects has been a major success in telecom and highway development projects, it has failed to impact the rail sector, despite the ministry coming out with several policies aimed in that direction.
Prime Minister Manmohan Singh had also recently spoken on the significance of PPP for infrastructure projects.
In the railways, the government retains ownership, but gets into partnership with private players for improving facilities at railway stations, for instance. Projects on offer through PPP include new engine manufacturing units at Marhoura and Madhepura in Bihar, high capacity freight bogie manufacturing factories at Dalmianagar in Bihar and Majerhar in West Bengal and the Son Nagar-Dankuni section of the Dedicated Freight Corridor.
PPP projects have failed to take off in the railways as industry has not responded well to the model agreements formulated by the ministry. Also, the railways’ insistence on majority stake in each projects have held up their awards.
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