Private funding of coaches workable for Bengaluru suburban rail project

Shreya Posted on: 2020-03-09 08:58:21 Viewer: 716 Comments: 0 Country: India City: Bengaluru

Private funding of coaches workable for Bengaluru suburban rail project

Bengaluru, India (Urban Transport News): After the directive given by the Prime Minister’s Office to explore the private funding options for the maintenance of the coaches for the proposed Bengaluru suburban rail project the Karnataka Rail Infrastructure Development Enterprise (K-RIDE) the Nodal Agency has undertaken a detailed study to analyze that if Public-Private Partnership is possible and the result comes out to be that it is feasible to have private funding of the coaches and that it would have a marginal impact on the profit margin of the railways.

It has also suggested that exploring the Special Public Entity (SPE) for the funding and considering it as a backup option can also be possessed. It is set to submit the detailed report in a while. The Chairman Railway Board Vinod Kumar Yadav proposed the total funding of the suburban project to be Rs 18,621 Crore for 148.17 km, wherein a total of 306 air-conditioned coaches will be required at the time of commencement of the suburban rail project (2026). “The total cost of the coaches works out to around Rs 2,200 Crore. The Prime Minister’s Office then directed that the coaches be funded and maintained by a private firm, on the lines of the Public-Private Partnership model adopted in major projects", said sources. According to sources, Private funding will reduce the total cost of Rs 18, 621 crores to Rs.15, 767 crores (calculating on the basis of taking the completion year to be 2026). The cost of funding coaches (rolling stocks) as per 2025 prices is estimated at Rs 2,785 crores with the coaches being leased for 30 year period to the leaser. Though the completion is now expected to take place only in 2026, the original deadline specified in the DPR has been retained. The number of coaches during the ear of launch has been specified as 306 in the original DPR. Talking about the critical appraisal of the Private assistance for the coaches, if the coaches will be privately funded then the internal rate of return which was earlier 10.99% now will be 10.74%. the report has also stated that the cost of borrowings from the government which was 8-9% earlier will boost up to 12% under the private leadership. The report also mentioned that Delhi was also looking forward to the PPP for its line-5 but gave up due to the huge costs involved. The government can adopt the public-private partnership model for the funding of coaches but they have to take the help of SPV special public vehicle recommendation into consideration, it added.

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