RLDA Vice Chairman talks about the railway station redevelopment economics, measures to invite private players...Read More
Indian Railways is redeveloping several railway stations including New Delhi and CSMT across its network to offer passengers airport-style world-class experience. The stations are being redeveloped with private sector participation and focus on revenue generation. Ved Parkash Dudeja, Vice Chairman, Rail Land Development Authority (RLDA) tells TOI's Smriti Jain about the railway station redevelopment economics, measures to invite private players and what passengers can expect. Edited excerpts:
Explain railway station economics, how will these redeveloped stations earn and where will the money be spent?
Railway stations provide guaranteed footfall which is beneficial in two ways. A user charge will be introduced which will be added to the ticket cost of the passenger and transferred to the developer from time to time. That will be a continuous steady stream of revenue once the station is redeveloped. To use the redeveloped facilities, passengers will have to pay a nominal user fee depending on the class of travel - it will go on increasing from sleeper to AC.
The developer will build a concourse which will have kiosks and F&B (Food & Beverage) and shopping outlets. With assured footfall the sale of items from these shops will also pick up and licensing of these kiosks will be given by the developer to different retailers. Parking fee will be another source of revenue.
On the expenditure front, the developer will have to construct the mandatory component of the station. Also, there will be regular expenditure on servicing the constructed portion. The developer will have to spend on the Operations and Maintenance because a standard of facilities will have to be maintained for the concession period. This will be up to 60 years depending on the type of station and agreement.
The real estate component will be clubbed with the station component. Some real estate development rights will also be given to the developer from where he can generate revenue for investment in the station.
Currently, we are spending railway money on the station redevelopment. This ambitious programme of railway station redevelopment needs a lot of investment, which railways is unable to shell out. Railways has to invest in other infrastructure projects such as new lines, gauge conversion and other essential projects which are required for network expansion and safety works. This will be a win-win situation where a private developer will be invited to invest on the station and get revenue for up to 60 years. Stations are at prime locations in the various cities and also offer guaranteed footfall - that's the strength the public sector offers. Private sector will bring innovation and efficiency to the project. They will invest capital to develop state of the art amenities to give world-class experience to passengers.
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Will railways get a share of the revenue that the private developer will earn?
First, the asset will be developed which will be owned by railways. We will get an asset worth hundreds and thousands of crores without spending any money. Railway will be able to give a better user experience to the public. Every station may not be financially viable or may not generate enough revenue for the developer to be able to share with us. But yes, there will be a revenue sharing agreement for the bigger stations where the revenue is sufficient to be shared after the maintenance and operations cost are taken care of.
NDLS: Artist impression of proposed New Delhi railway station redevelopment
What are the major steps being taken to invite private sector participation?
Private sector can only be attracted if you give them the assurance that the development will not be halted. RLDA has been in the business of land development since 2007 but in the last 3 years or so, a lot of regulatory relaxations have come through for giving more comfort to the developer. Earlier the lease period was only 45 years, in 2017 this was increased to 99 years. This allows for residential development to also take place on the surplus railway land. Surplus railway land has a lot of potential which could not be unlocked earlier due to regulatory hurdles.
In October 2018, the Union Cabinet approved that railways does not need change of land use for commercial development of their land. That decision has been circulated to all the states so that now railway or RLDA can approve their plans of development in consultation with the local authorities. The approval of local authorities is not required but they have to be consulted to ensure that the development is harmonious with the surrounding development and it is as per the DCR norms of that area. We are ensuring that whatever development we propose creates value for the city.
What are the major projects RLDA is working on?
We are redeveloping 62 stations across the country including New Delhi, Tirupati, Dehradun, Puducherry, Nellore, Ernakulam, Gomti Nagar Lucknow, Faridabad, Panipat etc. In addition, there are 84 colony redevelopment projects. Railway colonies are spread out on very large tracts of land in the form of single-storey, double-storey quarters, which are ages old. They are in a very dilapidated condition and have already outlived their designed life.
The colonies will be redeveloped by utilising the surplus SAR available. We will be leveraging the potential of land, extra SAR will be given the developer to generate revenue and create railway assets afresh. We will be developing new houses and plus RLDA will get revenue as a consequence of monetisation of surplus SAR available. We have recently awarded a colony at Guwahati despite COVID. There the developer is developing some 156 houses as a replacement of the existing quarters and he will also be paying us Rs 75 crore as upfront lees. Railways own land in the main areas of various cities and the houses are very old and spread out on very large areas. We are monetising the potential of this prime land.
The third vertical is greenfield commercial properties as standalone without any development. These land parcels are also being directly offered to the developer for development and for generating revenue for the railways.
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Will RLDA spend money on these projects?
RLDA was formed as part of an Amendment to the Railway Act in 2005 with the sole purpose of developing and monetising surplus railway land. RLDA's mandate is to generate and maximise the revenues from land without spending money from railways. Some small expenditure is made for development of sites in the form of making master plans of the area, fencing, boundary walls etc. But overall it is a net revenue generating model for colonies as well as station development. It is cost neutral to the railways and all the new assets are to be created by unlocking the revenue potential of land.
Which major players have shown interest in the projects so far?
New Delhi railway station
project, RFQ was opened in early February and 9 developers have participated in this process. Arabian Construction Company, GMR, Adani, Anchorage Infra, Omaxe - these are some of the developers which have shown interest.
What are the top things passengers can look forward to? Are you planning any airport-like check-in mechanism?
I will give the example of New Delhi railway station. Today, if you approach the station, you encounter a lot of congestion while entering. Sometimes you have to get down a kilometre away. Also, most passengers reach an hour in advance. At present the platforms are not fit to cater to all needs of passengers waiting for trains. Once we redevelop the station, it will be a different experience. There will be a departure lounge for relaxation, food and beverage outlets and even great shopping experience. This will be similar to the experience at an airport.
There will be access control on the platform. Those with platform tickets will be allowed in the concourse area, but may not be allowed on the platforms to avoid congestion. Platform gates will be opened 20-25 minutes before the departure of the train.