Hyderabad: The Centre has rejected the proposal of the TS government to give more powers to special purpose vehicles (SPVs) to execute railway projects, and to render financial assistance under viability gap funds and others. The Union railway ministry has started a new system of forming joint ventures with state governments to address demands of new railway projects. The state government has signed a memorandum of understanding with the railway ministry in this regard, as have some other state governments.
Under this scheme, a joint venture company will be formed with the state government having maximum equity of 50 per cent. Each joint venture company will form a SPV to take up the project.
The state government felt that the SPVs should be given more powers in selecting the projects and in their implementation, and therefore wrote to the Union railway ministry asking that more powers be given to SPVs. The TS government also asked the railways to extend viability gap funds for the projects which are not viable.
The railway ministry has rejected both proposals. SPVs will not be given greater powers, and, regarding viability gap funds, the railway ministry told the TS government to take up only the projects that are viable. It said if some non-viable projects have to be taken up, then if the state government gives the required land free of cost for the project, the project will be termed as viable.
The railway ministry also suggested that the TS government not calculate the profit and loss on a day-to- day basis. Some routes on some days will make a profit and on some days will make a loss. The ministry said whether the project is viable or non-viable will be known only after 35 years.
TS officials are also divided on this issue. Some say that when the state government is funding 50 per cent of the project cost, it must have some powers. Others say it is better to leave the selection and execution of projects to the railway ministry and state governments should just suggest projects that should be taken up.
