The Hindu Business Line : Project-specific SPV lays tracks of progress

The Hassan-Mangalore Rail Development Company has been successful in restoring the `vital missing track' for freight traffic on an important cargo route in Karnataka.

The Hassan-Mangalore Rail Development Company (HMRDC) Ltd is a good example of a project-specific SPV (special purpose vehicle) in building railway infrastructure.

Termed as the first of its kind in the country — in which a State government and the Railways came together to execute and operate a railway line — HMRDChas been successful in restoring the `vital missing track' for freight traffic on one of the important cargo routes in Karnataka.

The then metre gauge track of Hassan-Mangalore line was opened for traffic in 1979. The Railway Board sanctioning the conversion of Hassan-Mangalore into a broad gauge line in 1994-95 and the subsequent suspension of train operations on the stretch in 1996 led to the closure of the line for any traffic — be it for freight or for passenger.

After that, the line was languishing for completion, for almost a decade, for want of funds.

Considering the demand for the completion and commissioning of the line, HMRDC was set up as a joint initiative by the Union Ministry of Railways, the Karnataka Government, and the Karnataka Rail Infrastructure Development Corporation (K-RIDE) in July 2003.

While the Karnataka Government and Railways each hold 40 per cent stake in the company, New Mangalore Port Trust (NMPT) and Mineral Enterprises Ltd (MEL) hold 9 per cent each. K-RIDE holds 2 per cent stake in HMRDC.

The capital inflows into the project made possible by HMRDC and close monitoring of the progress of work by it helped in completing the line quickly. The construction of the line was carried out by South Western Railway (SWR) zone. For this, HMRDC entered into a construction agreement with SWR.

As a result, the line was commissioned on May 5, 2006 for freight traffic. The inflow of revenue from day one of the commencement of the line for freight traffic has proved that setting up project-specific SPVs of this kind is an effective way of building railway infrastructure. The growth in the freight movement in the first 11 months of the commissioning of the line has highlighted the necessity of this vital link between New Mangalore and the hinterland. While the target for 2006-07 was fixed at 1.4 million tonnes, the company surpassed this and handled 1.6 million tonnes of freight on the line till the end of March 31, 2007.

YEAR SCORE CARD

Ms Sarala Balagopal, Director and Chief Executive Officer of HMRDC, told Business Line that 1.94 million tonnes of freight was moved on the line at the end of May 4, 2007. Initially it was thought that the line had potential for cargo movement towards New Mangalore Port. However, commissioning of the line for freight proved that the line could generate traffic in both directions — towards and from Mangalore.

During the period between May 5, 2006 and May 4, 2007, as many as 886 trains ran on the line. Of them, 654 were loaded goods trains. Iron ore cargo contributed a major share to the total cargo handled on the line — both in terms of trains and tonnage handled. Iron ore cargo of 1.06 million tonnes was moved on 296 trains.

This route is the shortest rail route available for iron ore moving from Chitradurga, Tumkur and Bellary districts to New Mangalore port. The Hassan-Mangalore line reduces the distance between New Mangalore Port and the iron ore mines in the hinterland by about 200 km. With the commissioning of the line for freight traffic, more iron ore cargoes have started moving on the railway line compared to roads earlier. Similarly, it is the shortest route for imports, mainly fertiliser, moving towards destinations such as Hassan, Gulbarga, and Davangere in interior Karnataka.

While 152 trains transported 0.37 million tonnes of fertiliser cargo from New Mangalore to various destinations in the hinterland, 42 trains moved 0.15 million tonnes of coal cargo in the same direction.

From Mangalore, POL (petroleum, oil, lubricants) and LPG cargoes to the tune of 0.14 million tonnes were transported on 96 trains and limestone cargo to the tune of 0.19 million tonnes was moved on 55 trains. Other cargoes amounting to 0.03 million tonnes were moved on 13 trains from May 5, 2006 to May 4, 2007.

WHAT NEXT?

It is estimated that the Hassan-Mangalore line of HMRDC has potential for moving eight million tonnes of freight. However, the company has fixed the target at 3.5 million tonnes for 2007-08.

The break-even target for HMRDC is four million tonnes. This is based on the assumption that the present commodity mix would continue. At present, the commodity mix on the line is iron ore at 55 per cent, fertilisers at 19 per cent, and limestone and coal at 17 per cent. The company also has good scope for operating container traffic on the line, as NMPT has a good hinterland having container traffic. However, HMRDC is yet to set a date for commencement of such container operations.

Karnataka's eco-tourism will get a boost if the company decides to run `palace-on-wheel' type of trains on the route. Thanks to HMRDC, the railway line has now turned into a vital link on one of the important freight corridors of Karnataka. It is hoped the Railways comes out with many such project-specific SPVs in building infrastructure to boost freight movement.

More Stories on : Railways | Infrastructure | Karnataka

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