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Union Ministry of Railways signs JV Agreement with Odisha Government

Jun 15, 2016 16:35 IST

The Union Ministry of Railways on 14 June 2016 signed a Joint Venture (JV) Agreement with Odisha Government. The agreement was signed by VP Dudeja on behalf of Railways Ministry and Sanjay Rastogi, Pr Secretary of Transport, Odisha Government.

Highlights of the JV Agreement
• The MoU envisages formation of a Joint Venture company having 51 percent stake of the State Government and 49 percent stake of Ministry of Railways.
• The company will primarily identify projects and possible financing avenues in addition to Union Government and the State Government.
• After finances for a project are tied up, project specific special purpose vehicles shall be formed.
• These SPVs can have other stake holders from Industries, Central PSUs, State PSUs etc. However, the JV companies shall be  mandatory stake holders with minimum 26 percent shares in the SPVs.
• The Railways Ministry will also sign a concession agreement of 30 years with the project SPV for safe and sound operation, revenue sharing and providing technical & marketing logistics to the SPV.
• At the end of concession period, the railways will have option to take over the assets at a nominal price.
• The most important aspect of this MoU is that the ownership of the land shall vest with the SPVs which is a departure from previous practice. This will give financial leverage to the company to exploit commercial potential of the land.

Background:
• In view of the growing demands for railway lines in various states, Railways Ministry announced in its budget speech regarding setting up of Joint Ventures with states for focused project development.
• 17 State Governments consented for formation of Joint Venture Companies in collaboration with the Ministry of Railways for development of rail infrastructure in their respective States.
• Draft MoUs were sent to these State Governments and discussions were also held with them to clarify various provisions of the MoU.
• MoUs have already been signed with seven state governments- Odisha, Maharashtra, Chhattisgarh, Andhra Pradesh, Telangana, Kerala and Haryana.
• Jharkhand and Gujarat have shown their keenness to sign JV Agreements.
• Karnataka is already having a Joint Venture (by the name K-RIDE) with Ministry of Railways.
• The other States who have consented for formation of State JVs are Punjab, Bihar, West Bengal, Madhya Pradesh, Rajasthan, Tamil Nadu and Uttar Pradesh.

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