Private railway station developers to levy ₹20 as user charges on platform ticket

Private firms winning contracts to re-develop railway stations across India will levy ₹ 20 as user charges on a platform ticket, which is double the existing price.

The Indian Railway Stations Development Corporation Ltd (IRSDC) said that the ₹20 user charge has been set as per the decision taken by the Empowered Group of Secretaries (EGoM) to increase the overall viability of the projects, according to a document seen by BusinessLine.

Indian Railways temporarily raised the price of a platform ticket five times to ₹50 in March to avoid crowding at railway stations after lockdown was imposed to slow the spread of the pandemic.

IRSDC, an equal joint venture between state-owned IRCON International Ltd and Rail Land Development Authority, has been entrusted with the task of development/re-development of all railway stations of Indian Railways.

Some of these stations will be developed/re-developed on public-private-partnership (PPP) mode under which private firms will re-develop, construct and maintain the stations and also undertake estate development activities to provide integrated services to passengers.

Redevelopment plans

IRSDC has lined up Gwalior, Nagpur, Amritsar and Sabarmati railway stations for redevelopment on design, build, finance, operate and transfer (DBFOT) model with a concession period of 60 years for station development and station estate development. However, the concession period for residential/city side development has been set at 99 years, in accordance with the cabinet approval.

The indicative project cost estimated by IRSDC for the station re-development component for Gwalior station is ₹300 crore, Nagpur station is ₹465 crore, Amritsar station is ₹375 crore and Sabarmati station is ₹156 crore.

The indicative cost of station development component has been estimated based on the current operational plan and the ‘Manual for Specification and Standards for Railway Stations’.

The bid will be awarded to the entity quoting the highest premium for the project.

Real estate component

In the case of Sabarmati railway station, the ratio of real estate component is about 20 times of station development component while for Amritsar station, it is about three times.

The impact of higher real estate component would be captured in the higher premium (bidding parameter) quoted by the private developer, according to the IRSDC.

However, the Finance Ministry is of the view that the Railway Ministry may provide real estate component up to the level of financial viability only and no excessive land should be provided for real estate development.

To increase participation and promote competition among bidders, the government has decided to relax the six-bidder cap on short-listed bidders for PPP projects stipulated by the Finance Ministry earlier for PPP projects.

Shivaji Nagar, Surat and Baiyapanahalli railway stations will also be re-developed through the PPP mode.