In order to prevent Indian railways from getting into ongoing heavy traffic and spiraling into delayed supply of imported coal to power plants in turn leading to power supply crisis, the Government has decided to call for private investment in t.he tune of $1 billion to construct and connect rail lines to ports and national network by 2017.
This would be more than double the $400 million investment attracted by railways in the last decade since they allowed limited private participation and help fund crucial “last mile” links to ports.
Only 11, 000 kilometers of track has been added to the financially starved Indian Railways since independence. Compared to China which has added a humongous 14, 000km of new lines between 2006 to 2011, India’s infrastructural capacity and condition both need a phenomenal revamp.
Over-crowding at ports has been delaying much-needed coal deliveries to power plants and supplies of iron ore for steelmakers at a time when there is already a shortfall.
Prime Minister Narendra Modi wants private companies, which have held back from investing in freight lines because of the struggle to win the necessary approvals, to build more of the last mile links where bottlenecks bite the most.
Companies will now be allowed to part-own new rail lines for variable periods of time rather than a fixed number of years, said Mukul Saran Mathur, an executive director at the Ministry of Railways. The railways will also take on more of a project’s financial risk, Mathur said, without giving further details.
“We have put in place the appropriate policy. Demand is rising,” he said, adding that the government had given approval to domestic infrastructure companies such as Navayuga and Balaji Infra to build up to 316 km of lines within two years.
The ministry also wants foreign operators which own stakes in Indian ports, like Denmark’s Maersk, to invest but so far none had shown any interest.