BENGALURU: A day after the Centre clears proposal to form joint ventures with the states for rail projects, Railways Minister Suresh Prabhu today said the government will soon sign an agreement with Karnataka to form such an entity in the state.
Prabhu said the Union Cabinet has allowed Indian Railways to partner with state governments to develop railway infrastructure.
Speaking at the Valedictory function of global investors meet ‘Invest Karnataka 2016’ here, he said that he had a meeting with Karnataka Chief Minister Siddaramaiah in this regard and will soon come to an agreement with the state government to ensure that a new entity in JV is created.
“Yesterday the Union Cabinet has decided that now we will make partnership with states so that railway infrastructure can be developed… so that the railways can grow at a much faster rate,” Prabhu said.
“We will make Joint Venture, we had cost sharing model in the past,” he said.
In the Joint Venture ownership of the assets that we will create will be with railways and state government. It will provide a new avenue for development of railways in the country, also opportunity,” he added.
The valedictory function was attended by Siddaramaiah, Union Ministers Nirmala Sitharaman and Sadananda Gowda, among others.
Prabhu said Railways planned to develop stations as new icons of the city.
He also said he has in principle agreed for suburban railways system for Bengaluru.
‘We will make Joint Venture with Karnataka to do this, we will have to do it differently… I will take this up after budget,” Prabhu added.
Railways can now form JV companies with state governments with equity participation to help identify areas that require new railway lines, acquire land for projects and help pool funds as well as jointly monitor these projects.
Keeping in mind the growing demands for railway lines in various states and huge requirement of funds to execute them, JV companies will be responsible for identifying projects, land acquisition and possible financing in addition to government funding and also monitoring.
Each Joint Venture (JV) would have an initial paid-up capital of Rs 100 crores based on the quantum of projects to be undertaken.
Railways’ initial paid-up capital will be limited to Rs 50 crore for each state. Further infusion of fund/equity for the purpose of the projects shall be done after approval of the project and its funding at the level of appropriate competent authority.
The JV can also form project-specific SPVs with equity holding by other shareholders like banks, ports, public sector undertakings, mining companies.