October 13, 2008

Indian Railways plans bulk terminal development thro PPP

Exim News Service reported that union railway ministry has drawn up a terminal development scheme for private players. Under this scheme, private companies manufacturing cement, fertilizer and fly ash are proposed to be allowed to build their own terminals for transporting these products.

This would help Indian Railways obtain guaranteed freight customers for at least 20 years, while simultaneously relieving the burden of handling the freight. The scheme allows for special terminals to be built for bulk commodities which can be transported in loose quantities as well as terminals for finished products like iron and steel, bagged cement and bagged fertilizers by the manufacturer.

The terminals may be allowed to come up near the manufacturing hub either on private land, or on land owned by Indian Railways. The developer would have to build the terminal at his own cost, according to his specific needs. These terminals may house facilities for storage, loading, unloading and packaging of bulk commodities.

According to initial estimates, setting up such a terminal would require an investment of at least INR 40 crore. But as an incentive, the terminal owner will enjoy freight discounts over a period of 20 years. This would translate into a freight concession of 15%, a waiver of the hefty busy season surcharge along with a waiver of the terminal surcharge for developers of such terminals.

In the first year of operation, the developer will have to provide the Railways with at least 0.5 million tonnes of freight. In the second year, this would rise to 0.75 million tonnes and, in subsequent years, Indian Railways must be provided with a minimum of 1 million tonne from each of these terminals.