Private container train operators queer the pitch for Concor strategic sale

P Manoj Mumbai | Updated on October 07, 2020

Terminals built on Indian Railways land by Container Corporation of India Ltd (Concor) must be treated as national assets and subjected to a common user regime wherein no operators are denied access rights or have to face discriminatory action, a lobby group for private container train operators have said.

The Association of Container Train Operators (ACTO), whose members hold permits to run container trains across India, has urged the Ministry of Railways to change the policy on use of terminals built on Railways land to bring parity among all operators and ensure that increased terminal access leads to higher rail volume of containerized traffic.

ACTO’s demand queer the pitch for the planned privatisation of Concor, the market leader in container train operations. Private container train operators fear that the strategic disinvestment of Concor would convert a public monopoly into a private monopoly and further aggravate the lack of level playing field.

Beginning April 1, the annual land license fee is calculated at the rate of 6 per cent per acre of the market value of land where the terminal is located.

Concor’s land license fee pay-out is estimated to jump from the FY20 level of Rs110 crore to about Rs900 crore with the revision in charges. This will impact its share price, dampen bidder interest and result in lower realisation for the government during the sale.

The finance ministry has suggested halving the land license fee to 3 per cent to attract bidders and maximise realisation from the sale.

“If they set the land license fee at 3 per cent, life becomes difficult for us because at such a low license fee if prime land is available to the private owner of Concor, then their pricing power is much higher than that of ours because we are buying land at exorbitantly higher prices to build terminals,” said an executive with a container train operating company.

“Anyone who buys Concor with land license fee of 3 per cent becomes the biggest beneficiary and other operators suffer the most at their hands. That is not acceptable to us,” he said.

Private operators have repeatedly objected to the arrangement of Railways land being provided to Concor on “concessionary terms” as it violated the concession agreement signed between Indian Railways and the container train operators including Concor.

“Without prejudice to the foregoing, the Parties acknowledge that in the event any railway land is surplus and available, the Concessionaire may, for the sole purpose of establishing a Rail Terminal or for laying any rail track, to connect to the nearest Rail Head, apply for use of the same on leave and license basis on such terms and conditions as may be laid down by Railway Administration from time to time. Provided that, in allotting such land, Railway Administration shall not discriminate among the Concessionaires and agrees to establish a non-discriminatory framework for this purpose...”, according to the concession agreement.

The concessionary use of Railway land that has so far been permitted to Concor is in clear legal violation of the concession agreement that exists between the Indian Railways and private container train operators. This arrangement has in effect provided Concor with an unfair market advantage compared to the other container train operators, and artificially escalated its market value, ACTO said.

“We would accordingly request that prior to any privatization initiative, all Concor terminals that are developed on Railway land must be declared as common user facilities, and a mechanism developed for ensuring non-restrictive and non-discriminatory access to all authorized container train operators,” ACTO wrote in a October 1 letter to V K Yadav, Chairman & CEO of Railway Board.

“In addition to correcting a legal anomaly that exists at present, this will also ensure that no private entity is provided any undue benefit in terms of terminal or land access in violation of the concession agreement,” it stated. Ends/

Published on October 07, 2020

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