The Indian Railways is set to more than double the lease tenure under the station redevelopment programme—raising it to 99 years from 45—in an effort to make the scheme more attractive for investors whose response has so far been only lukewarm.
A top Railway Board official told ET that the decision was taken in a recent meeting called by railway minister Piyush Goyal to review measures aimed at securing private investment in the cash-strapped national carrier.
“The long contract period will make it lucrative for private players to invest in small stations as well,” the official said, requesting anonymity. “Investors will also be allowed to commercially utilise space on the platforms.”
The railways is offering up to 400 stations to private entities in, what it has called, the biggest station redevelopment programme in the world. The scheme envisages a minimum investment of Rs 1 lakh crore.
Under the scheme, companies winning the bids will have to modernise the stations and provide world-class passenger amenities, for which they will, in return, get the ancillary land on lease for 99 years. The companies can build malls, hotels and other commercial complexes on the land to recover their investment.
It is also working on a plan to secure the infrastructure project status for station redevelopment, which will enable the developers get easy and economical loans from banks.
The stations will be awarded under the Swiss challenge method, where a proposal is invited online and rivals can offer counter-bids. The method cuts the long-drawn tendering process currently used by the railways.
An expert committee will accept the best proposal and the original proposer will get an opportunity to match it.
A senior railway official said the 99-year lease offer will make it the longest tenure for any public-private partnership project in the country.
“In the rail ministry’s consultations with stakeholders, several big infrastructure companies were willing to invest in stations in major cities such as Delhi, Mumbai and Bengaluru,” this official said. “However, there were no takers for small stations.”
The railways is also planning to bring in a revenue sharing agreement with the concessionaire, where the latter will have to share some revenue with the railways every year.