Hinterland connectivity has been recognised as one of the most critical issues in port competitiveness and development around the world. Therefore, increasing port connectivity to the hinterland through a network of highways, railways, inland waterways and pipelines has been identified as a major component of the Sagarmala programme. To facilitate this, in July 2015, a special purpose vehicle (SPV), Indian Port Rail Corporation Limited (IPRCL), was incorporated under the administrative control of the Ministry of Shipping for the execution of last-mile rail connectivity projects and internal rail projects of the major ports.
Role of IPRCL
IPRCL operates across three verticals – last-mile connectivity and augmentation projects; augmentation, operation and maintenance of internal port rail systems; and hinterland connectivity projects. Hinterland connectivity projects require large investments, have long gestation periods, need dedicated resources and have multiple beneficiaries. With regard to these projects, IPRCL can proactively identify, do the groundwork and undertake pre-feasibility studies. However, this will require significant efforts in the form of scanning and identifying opportunities; working out the benefits, geographical spread and possible stakeholders for each project; and developing a roadmap for execution.
IPRCL may also leverage participative models of Indian Railways (IR) such as the nongovernment railway model and the JV model for sanctioned bankable railway projects. Under the former model, the projects are totally funded by the private agency involved. Maintenance is undertaken by the developer or IR and the infrastructure provider gets a user fee equivalent to 95 per cent of the apportioned traffic revenue net of cost of operations. However, under the latter model, projects are implemented through a JV with IR (or its public sector undertakings) having a minimum equity of 26 per cent. The project is entirely funded by the JV and has a concession period of 30 years. IR acquires the land using the JV’s funds and refunds it at the end of the concession period without interest.
Rail Vikas Nigam Limited (RVNL) has created six SPVs under the JV model for providing port connectivity. These are Kutch Railway Company Limited for Kandla and Mundra ports in Gujarat, Bharuch Dahej Railway Company Limited for Dahej port in Gujarat, Krishnapatnam Railway Company Limited for Krishnapatnam port in Andhra Pradesh, Haridaspur Paradip Railway Company Limited and Angul-Sukinda Railway Company Limited for Paradip port in Odisha, and Dighi Roha Rail Limited for the Konkan coast in Maharashtra. Further, under the Ministry of Railways, two new SPVs for enhancing port connectivity – a JV of Konkan Railway and the JSW Group for Jaigarh port and a JV of RVNL and Rewas Port Limited for Rewas port – have been formed. Further, two port companies – Adani Ports and Special Economic Zone Limited and Dhamra Port Company Limited – have undertaken rail connectivity improvements under the non-government railway model.
Currently, some major port connectivity projects being undertaken by IPRCL are rail connectivity to the proposed dry ports at Sindi yard and Jalna at JNPT at a cost of Rs 0.38 billion and Rs 0.5 billion, respectively, and doubling of the railway line from Durgachak to the Haldia Dock Complex at the Kolkata Port Trust, entailing an investment of Rs 0.79 billion. Further, it has also identified several new critical connectivity projects.
The projects aimed at enhancing port connectivity to the hinterland will go a long way in reducing logistics costs and the time taken for cargo movement. This, in turn, will contribute towards making Indian trade more competitive. However, there is a need to ensure that issues such as delays in shifting utilities, problems in securing site clearances and cost escalations are addressed for faster project execution.
Based on a presentation by A.K. Agrawal, Managing Director, IPRCL, at a recent India Infrastructure conference