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Imagine railway stations in India resembling airports! No fantasy, this! It's happening and happening at great speed. Our present mandate is to make money out of thin air and bring railway stations at par with airports! But the rules of the game are undergoing dynamic changes. Unlike in the roads & highways and airport sectors, the Railways presently does not have the concept of user charges. User charges help in providing a well-defined revenue stream to the developer. Once user-charge model proposal gets government's nod, the pace of station redevelopment is likely to accelerate, states Sanjeev Kumar Lohia, Managing Director & CEO, Indian Railway Stations Development Corp. Ltd (IRSDCL).
How is the world's largest exercise for redeveloping 600 stations under the Transit-Oriented Development (TOD) model progressing and are you satisfied with the pace of work?
You have asked a very loaded question. I would say that one must never be satisfied as the aspiration level must always be set very high. Despite tremendous challenges, we have managed to achieve quite a bit. But in terms of what the country expects from us, we are far behind! A lot of work has already been done through various agencies in terms of upgrading the infrastructure and cleanliness. But what we are looking at eventually is the large-scale transformation of stations along the lines of international airports in Delhi and Mumbai. Just like you have"aeropolis", we envision setting up a "railopolis", which will be a 24x7 central business district. To turn that vision into reality we have been working on various initiatives to build a highway on which the projects can be run. We are setting up systems and making form-based codes as we would be approving the layout and building plans within the railway land. We would also be functioning like a zonal railway administration as far as the railway station redevelopment plans are concerned. We, therefore, require a framework to approve anything. The Union Cabinet has also asked us to consult the local municipal bodies and other statutory authorities so that the development of railway land is in harmony with the surroundings, generally following the National Transit Oriented Development Policy. There are two ways of making anything harmonious with the surroundings. You either copy from the surroundings or make something so good that the surroundings end up taking a cue from you. We are redeveloping stations with this philosophy so that they can become islands of excellence as well as mini smart cities.
Which stations do you propose to complete first?
The Habibganj Station is at an advanced stage of implementation. When we started the exercise, several senior industry people -and that included railway officers - felt that infrastructure like subways couldn't be constructed under running tracks. I am very happy to share with you that we have completed both the subways that most thought would be impossible to build! We will now have grade-separated segregation of arriving and departing passengers. The arriving passengers can seamlessly exit the building using subways. The departing passengers can descend from the concourse located above the tracks to the platforms to catch the train. Just as you wait for your flight at the airport, you can wait for your train sitting at the concourse level. The arrangement will help in reducing crowding at platforms. Presently, people are not very inclined to take a footbridge if it's not supported with elements that can facilitate climbing up the stairs. Therefore, we will be providing elevators and escalators. This would additionally help to ensure that the entire station is divyang (handicapped) friendly. The cover on platforms has also been largely completed.
As per your own calculations, you have estimated that IRSDCL needs an equity base of Rs 10 billion to raise Rs 45 billion debt from the market. How successful have you been on that front?
Our present mandate is to make money out of thin air and bring railway stations at par with airports! That's pretty tough as the land cannot be sold or mortgaged and only air rights can be sold. Unlike in the roads & highways and airport sectors, the Railways presently does not have the concept of user charges. User charges help in providing a well-defined revenue stream to the developer. In the process, the risks of the developer also get considerably reduced as compared to the dependency on real estate. Moreover, once you are entirely dependent on real estate, financial closure becomes a challenge. For instance, in the present scenario, banks don't fund the land component, refuse to provide loans beyond a certain level and seek several collaterals. We approached the Indian Railway Finance Corp. (IRFC) for the redevelopment of Anand Vihar, Bijwasan and Chandigarh stations under the Engineering Procurement Construction (EPC) model as that would require us to make payments to the developer. We will contribute 30 per cent of the equity for the project, while 70 per cent would be financed with the loan raised from IRFC. It is also the first time that IRFC is venturing into this sector. We worked with them for over a year to get the loan sanctioned and the Ministry of Railways facilitated in the process with a letter of comfort. But then IRFC wanted the letter for the entire tenure of the loan as they considered it risky. Now, had that been against user charges then IRFC would not have sought a letter of comfort from the Railways. Therefore, if we have the user charge model, cash accruals will happen as soon as the station is redeveloped. And those charges can be absorbed in the ticket price. Our proposal is presently under consideration and if it's done then the pace of station redevelopment would get expedited. Globally, there are very few examples of infrastructure development that is solely based on the monetisation of real estate.
In an earlier interview with us, you had said that station operation & maintenance will be done by private operators. How will you identify appropriate entities?
I would like to make something very clear here. It is often said that stations are being privatised. The fact of the matter is that stations are not being privatised! Having said that, a substantial part of functions like housekeeping, facility management, maintenance, kiosks, advertising and parking is done through private agencies. Now, what we are trying to do is put all of those activities into an integrated unit to improve passenger experience. We have set up a new vertical in the country where five stations are now being managed by IRSDCL through private entities on the management contract model. We took the risk because the private sector was initially unwilling to do so on a concession basis. As the private sector has gained confidence, we are finding parties who are interested in taking up operation & maintenance of stations where huge Capex is not involved. If the user charges model is approved, the station will be operated and maintained by the developer.
How have developers responded to some of the measures that you had progressively introduced to protect their investment?
Any investment by the private sector has to be adequately safeguarded. The agreement should not be one-sided, but balanced. Only then the project becomes bankable. Since the Government of India's effort is to make infrastructure development bankable, we would like more participation. The private sector has responded positively. Discussion on the model concession agreement is on with the empowered group of secretaries and we hope that it will be finalised soon.
There was a lot of discussion on IRSDCL's revised structure. Please shed some light on this.
IRSDCL has been given a huge responsibility and its mandate requires taking wise inputs from other stakeholders. So, the Union Cabinet decided that our board should have nominees from the Ministry of Finance, NITI Aayog and Ministry of Railways and that Member Engineering and Ex-Officio Secretary to the government should be the chairman of this corporation. Normally any corporation, including those that are 100 per cent owned by the government, has two nominees on the board. As compared to that we have four nominees. I would, therefore, say that IRSDCL is a dynamic 50:50 JV that is managed by an independent board.
- Manish Pant