As wait gets longer for PPP funds, Railways falls back on direct funding for station redevelopment project

Instead of PPP, Railways has decided to return to the old Engineering-Procurement-Construction (EPC) model of execution, The Indian Express has learnt. Under this model, it will be the paymaster of the work to be carried out by construction firms.

TO SPEED up the railway station redevelopment project, the government will be going back to direct funding of the works, rather than waiting for private capital to arrive through the Public Private Partnership (PPP) model.

Instead of PPP, Railways has decided to return to the old Engineering-Procurement-Construction (EPC) model of execution, The Indian Express has learnt. Under this model, it will be the paymaster of the work to be carried out by construction firms.

Zonal railways will issue tenders for 21 stations by mid-December. The designs for these have been finalised by the Railway Ministry. A set of another 30-odd stations is also in the pipeline, sources said. Tender documents were believed to have been finalised this week.

The total cost of the redevelopment exercise would be somewhere around Rs 12,000 crore, sources said, adding that unofficially, this shift is being termed “deferred PPP”.

The first list of stations, work for which will be bid out, includes big and small stations — Ghaziabad, Delhi Cantonment, Prayagraj, Kanpur, Gaya, Gandhinagar-Jaipur (suburban), Udaipur, Kota, Dakaniya Talav near Kota, Madurai, Eranakulam, Tirupati, Lucknow (Charbaag) and Kollam among others.

With the mode of the project execution now simplified, the ministry expects the zonal railways to actually hand over the contracts in a couple of months after completing the tender formalities. After that, depending on the size of the work, 18-30 months would be given to the contractors to finish the work.

What has given Railways viability in this old model of execution is the fact that the government had earlier decided that User Development Fee would be levied through tickets on the redeveloped stations, like airports. The thinking within the establishment is that this fee will make the model financially viable for the national transporter. “We would also be in a better position to push the works in terms of speed and quality,” a senior zonal railway official told The Indian Express.

This comes close on the heels of the first redeveloped railway station, Habibganj (renamed Rani Kamlapati) in Bhopal, getting completed in PPP mode. It was inaugurated by Prime Minister Narendra Modi on Monday. New Delhi Railway Station and the iconic Chhatrapati Shivaji Maharaj Terminus will continue to go the PPP way, sources said.

This brings the station development project, stuck in inordinate delays over the past five years, to a full circle. The ambitious exercise — one of the top infrastructure items monitored by the PMO — has toyed with several modes of funding and execution, including PPP, in the past with little success. There has also been an Empowered Group of Secretaries headed by NITI Aayog CEO Amitabh Kant pushing this project.

The project got a boost after the arrival of Railway Minister Ashwini Vaishnaw, who has taken a fresh look at the deliverables and set stricter targets and timelines for the bureaucracy, sources said.

A shift from the PPP model

The RAILWAYS has been looking for a financial model to attract private investors for getting stations redeveloped — without much success. With direct funding, there were apprehensions around borrowing funds from the market and repaying it. The current move would at least ensure the job begins in earnest. And with the User Development Fee, there is a way to recover the cost as well.

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