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Piyush Goyal to overhaul Prabhu's Rs 1-lakh-cr station development plan

Shine Jacob / New Delhi 09 Oct 17 | 08:30 AM

Suresh Prabhu’s Rs 1-lakh-crore station redevelopment plan, which he drew up as railways minister, is set to go for an overhaul under Piyush Goyal, who has replaced him.

According to persons close to the development, Goyal wants to cancel the existing bidding process for 23 stations owing to a tepid interest shown by construction companies.

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The decision was taken after a meeting Goyal had with major real estate companies — including the Tata group, Shapoorji Pallonji, GMR, the Essel group, and L&T — last week.

Officials said the new minister was not in favour of the Swiss challenge mode for redevelopment (under which a public authority asks for a bid, and publishes it for third parties to match or top it) after a lukewarm response from industry players. 

The players expressed concern over the terms of the bidding process. 

Now, Goyal wants the Railways to invest and develop stations through designs prepared by a pool of architects and by forming a special purpose vehicle for each station.

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Private companies will be offered stakes through bidding in these companies after construction starts.

In the first stage, 15 stations are likely to be taken up at an investment of Rs 6,000-7,000 crore.

The Railways is looking to fund the initial development of these stations through its own resources. “In order to de-risk the Railways, through the 

Indian Railway Stations Development Corporation, we will start construction at these 15 test projects and will invite private participation midway after taking the necessary clearances," a source said. 

Interestingly, bids for two stations — Anand Vihar and Bijwasan — are being called off after investors said there was no clarity on land-use rights. Though in the initial stage 13 players were shortlisted for Anand Vihar and nine were in the fray for Bijwasan, none of them opted for price bidding, citing land-related issues. 

The companies in the race for these two stations include the Tata Group, Shapoorji Pallonji, GMR, the Essel Group, L&T, IL&FS, McNally Bharat, Supreme Infrastructure, Oriental Structure, the Bhartiya Group, MBL Infrastructures, ASF Infrastructure, Bansal Construction, Bharti Realty, Ahluwalia, and IRB Infra.

According to a plan chalked out under Prabhu, 400 stations were to be redeveloped for commercial use at an investment of about Rs 1 lakh crore. 23 were to be taken up in the first phase. They included Chennai Central, Ranchi, Udaipur, Indore, Yesvantpur, Bangalore Cantonment, Visakhapatnam, Howrah, Kamakhya, Faridabad, Jammu Tawi, Secunderabad, Vijayawada, Kozhikode, and Bhopal. 

Officials indicated that the change of policy would not be applicable to stations that were farmed out (including Habibganj, Kozhikode, and Jammu), and where local developers were involved, and the parties could go ahead with construction. 

“The government is targeting a roll-out of the new station redevelopment policy by December. The policy may go to the Cabinet for a fresh clearance. On average, Rs 400 crore is likely to be spent on developing each of these 15 stations," said a source close to the development. 

However, the basic concept of redeveloping 400 stations may remain the same, but instead of private players coming up with the design through Swiss challenge mode, it will be a pool of Railways-appointed designers who will do the designs. As an initial step, many notable architects such as Hafeez Contractor and the C P Kukreja group were consulted by Railways officials and were also part of Goyal’s meeting with industry players.

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A major change that will come up in the process of allotment will include extending the lease period from 45 years to 99 years. “Earlier, only one sublease was permitted and it will be increased in fresh laws. Industry players also demanded that the railways should absorb the shock in the case of a change in law condition (like the goods and services tax), in the contract period," he added.  

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