EoI for Concor is waiting for Railways to frame a clear policy on land licencing fee, says DIPAM Secretary Tuhin Kanta Pandey

P Manoj Mumbai | Updated on October 09, 2020 Published on October 09, 2020

Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM)

In order to avoid confusion, Railways is working on the policy

Almost a year after the Union Cabinet cleared the privatisation of rail hauler Container Corporation of India Ltd (Concor), the expression of interest (EoI) is yet to be invited. BusinessLine spoke to Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), on the delay. Excerpts:

I understand that the invitation of EoI has been held up over the land licencing fee (LLF) issue...

It’s not merely the LLF, it’s the whole LLF policy. Today, the Railways don’t have a clear policy on how land will be given, for how many years lease, etc. So, the LLF policy has to be clarified by the Railways. They are preparing one and I think very soon they will come out with it.

Till March this year, the LLF was levied on Concor on a per TEU basis. Since April, it is calculated at 6 per cent of the market value of the land...

It was done in a very ad hoc manner (calculation of LLF). The 6 per cent policy is not for container freight stations (CFSs) and inland container depots (ICDs) only, it is also valid for those looking to set up a kiosk at railway stations.

For CFSs/ICDs, they applied it for Concor. But, they did not actually apply it and Concor never paid it so far.

They were following the per TEU basis method every three years. The last one expired on March 31. DIPAM had been asking the Railways to settle the policy before that. Instead of doing it, they simply issued something to Concor and Concor is protesting. So, on their so-called 6 per cent land value calculation, not a single piece of land has actually been taken by anybody, either by Concor or by any private entity.

It is a non-starter, which is only on their books. That policy has never been applied for Concor also. There is total confusion and we have been pressing them to clear that confusion.

Wouldn’t somebody coming and buying Concor want a long-term view?

It is not only an issue for someone buying Concor. It will be valid if, let us suppose, Concor remains in the public sector. We are talking of only pre-2005, but post-2005, even Concor has not taken any land from them. They are buying land to develop facilities because for linear projects, you can actually buy land anywhere and then request the Railways to give you the siding.

Railways have opened up the container train operations sector to private funds about a decade ago…..

They have opened up the sector, but they have not facilitated land for them. It is the old land which is there. But, after 2005, even Concor has not picked up any land from the Railways because of this confusion.

Is it right to assume that EoI will be invited only after this confusion is cleared?

Our EoI is also waiting for that because we don’t want confusion. We also don’t want confusion for other private players who are already operating in the market. We also want them to be looked at. Our point is, you should look at it as a sector, it’s not merely a Concor disinvestment issue.

Whatever it is, for the land already given, you can’t ask them to wind up operations or put them in uncertainty on whether the lease will be renewed or not. We cannot put anybody, be it private be it public, into confusion. We want clarity and they should do it as a proper government policy, not as something they will renew or not every five years or so. How can it be a Railway official’s decision? You will have people lobbying the Railways for renewal of leases every five years, that is not the way to attract investors.

We don’t want any obfuscation. The Railways have agreed; their policy is at a very advanced stage.

Will the policy be restricted to CFSs/ICDs?

It may even be a broader policy. Whatever issue Concor is facing, there should be a clearer policy for that because Concor also cannot be treated in that manner; you just suddenly can’t ask them to pay a significantly higher LLF.

It is not only the value, it is also the terms and conditions. It is not merely the LLF issue, but the whole policy, inclusive of the conditions, what is the term of lease, how does it get renewed, what would be the clauses, etc. They should not simply get up one fine morning and take over the land.

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Published on October 09, 2020
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