Railways in India have been operational since 1853, and most of the stations are equipped with facilities which are well over 100 years old. With station redevelopment being given high priority, the government is aiming to transform these stations to provide amenities that are at par with international standards. Indian Railways (IR) has embarked upon an ambitious programme, targeting the redevelopment of about 400 Category A1 and A railway stations. These stations are located across 100 large cities and handle about 16 million passengers per day, with an annual growth rate of around 7 per cent in passenger footfalls. These stations occupy about 2,700 acres of prime land at city centres. However, implementing a programme of this magnitude is a challenge due to the lack of an adequate revenue source, thus necessitating land monetisation to fund station redevelopment.
Objectives of the station redevelopment programme
Station redevelopment essentially involves creating iconic structures (by duly integrating the architecture and culture of a city), providing seamless integration of railways with other modes of transport, creating user-friendly structures with designs that are disabled friendly, and ensuring net zero energy buildings which are LEED Platinum certified.
The station redevelopment programme will work on the principle of transit-oriented development (TOD), and will cover spaces around stations as well. In fact, the aim of developing 400 stations is the world’s largest TOD programme. At present, stations serve only one function – that of transportation; however, post redevelopment, transportation will be only one of the many functions that stations will serve.
Moreover, the station redevelopment programme involves bringing innovation in design by focusing on the 7 C’s – city centre, convenience of passengers, congestion-free, communication friendly, conservation of the environment, cleanliness in operations and maintenance (O&M) and design, and convergence of various transport modes.
Implementation strategy
The development of stations will be funded by the developer using revenues from real estate. Land will be given on a lease for a period of 45 years and commercial development has to take place in a maximum of eight years. The Indian Railway Stations Development Corporation (IRSDC) is considering revising the eight-year period for development, as it seems to be too short. For instance, in one of the station redevelopment projects, of the total built-up area, 70 per cent of the work can be done in eight years and the remaining in about 10 years.
Stations will be given on a licence to the developer, who will transfer station assets to IR and operate the station for a period of 15 years through an O&M contract. Before the completion of station development, the developer will not be permitted to earn revenues from the real estate. Meanwhile, kiosks and parking will be managed by the station facility manager.
Investment opportunity
There exists an investment opportunity worth about Rs 1 trillion in station redevelopment and commercial development. A surplus of around Rs 110 billion is expected to be generated from station redevelopment if the land is given on lease for a period of 45 years. So far, 12 stations have been entrusted to the IRSDC for redevelopment and 23 stations have been taken up by the zonal railways directly. The zonal railways will redevelop the stations based on the bid challenge method (modified Swiss Challenge method), while the IRSDC will de-risk projects (seek all approvals and consultations) and then allot them to developers.
Projects will be developed on a self-financing basis. The capital and running cost of the project will be financed through project revenues and station facility revenues. Project revenues will be generated from commercial development of surplus railway land and airspace, while station facility revenues can be generated from kiosks, advertisements and parking. Further, the government is also exploring other sources of non-fare revenue such as rail display networks.
Update of IRSDC’s key projects
At present, 12 projects are at different stages of development. The Habibganj station redevelopment is the first project to be awarded on a public-private partnership (PPP) basis. After initial apprehensions, Habibganj station was awarded to the Bhansal Group on March 1, 2017. The station will become the country’s first privately managed station. Construction is under way and is expected to be completed by December 2018.
Meanwhile, the Gandhinagar station redevelopment project will be carried out through a special purpose vehicle (SPV) set by up the Gujarat government and the IRSDC. Over the past 15 years, Gandhinagar has emerged as a hub for many key international exhibitions in Gujarat. The SPV – Gandhinagar Railway and Urban Development Corporation Limited (GARUD) – has been tasked with the redevelopment of this station and the management of the Mahatma Mandir and Exhibition Centre at the helipad ground, where the Vibrant Gujarat Summits and other important events are held. The SPV will have a 74 per cent equity contribution from the state government and 26 per cent from the IRSDC. The SPV will also receive grant funding of 20 per cent each from the Ministry of Railways and the Gujarat government. One distinctive feature of this redevelopment project is the construction of a five-star hotel on top of the railway station. The hotel will have around 300 rooms and is expected to cater to delegates who travel to Gujarat for various summits. As of January 2017, the foundation stone has been laid. For the first time in the country, there will be a management contract for the appointment of an operator for the hotel, bidding for which has been successfully conducted.
The redevelopment of Surat railway station is a first-of-its-kind attempt in the country, bringing together three levels of government – central, state and municipal. All three levels of government have come together to pool land and form a joint venture (JV) – Surat Integrated Transport Corporation Limited – for the development of a multimodal transportation hub at Surat railway station. Station redevelopment will be funded by commercial development on leasehold rights for a lease period of 90 years on vacant railway land and airspace. In the JV, 63 per cent stake is held by the IRSDC, 34 per cent by the Gujarat State Road Transport Corporation, and the remaining 3 per cent by the Surat Municipal Corporation.
The redevelopment of Anand Vihar railway station in New Delhi has also witnessed some progress. The IRSDC will invite requests for proposal by October 2017 and is expected to appoint a developer for the project by November 2017. The Bijwasan station redevelopment project is a greenfield project aiming to provide seamless connectivity between the railway station, the Dwarka metro corridor, the Indira Gandhi International Airport and the Dwarka expressway. The IRSDC is currently working with the Ministry of Urban Development and the Delhi Development Authority to sort out certain issues in the allotment letter. Once this is done, the project will be awarded so that the work can commence quickly.
However, the IRSDC’s plan to redevelop Chandigarh railway station has hit a roadblock. Despite having the requisite approvals in place, the Chandigarh administration has reduced the area of commercial development due to which the IRSDC is looking for alternatives. The possibility of implementing the project on some other model, such as engineering, procurement and construction or viability gap funding, is being explored by the organisation.
The Shivajinagar station redevelopment project in Pune has been approved by the Pune Municipal Corporation after many deliberations. However, the project is facing various challenges which the IRSDC is resolving with the Maharashtra government. The organisation is trying to pool some of the land belonging to the Maharashtra State Road Transport Corporation, after which it will invite bids for the project.
With regard to the redevelopment of the Amritsar railway station in Punjab, the preliminary concept plan has been developed, which envisages new platforms, LED lighting systems, elevators, Wi-Fi, malls and smart parking.
The way forward
The IRSDC is considering the funding of station redevelopment projects beyond the traditional method of land monetisation. It is also exploring the management contract operator model for providing first-class passenger amenities at the stations. In order to develop smart cities, it is essential to have smart railway stations. To this end, the IRSDC has tied up with the Ministry of Housing and Urban Affairs for linking smart city development with the station redevelopment programme.
Based on a presentation by S.K. Lohia, managing director and chief executive officer, IRSDC, at a recent India Infrastructure conference
