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20 major stations set for revamp, auction in January

Economic Times:  December, 2016

New Delhi: Indian Railways is readying to auction 20 major stations for redevelopment next month, hoping to attract private investment in creating world class railway stations that will cost an estimated `15,000 crore in the first phase and to earn revenue without putting further pressure on its strained finances.

The stations will be awarded to private developers under the so-called Swiss challenge method, which involves inviting a proposal online and allowing rival bidders to beat that proposal.

The developers, along with revamping infrastructure at the stations including platforms and lounges, will be able to build hotels, malls, multiplexes and other commercial units at the land that will be earmarked by the railways.

They will get the rights to commercially exploit the land of the station owned by the railways for about 40 years. The Swiss challenge method cuts down on the long-drawn tendering process being used by the railways.

The Railway Board had appointed Boston Consultancy Group as the strategic advisor for this project. “Based on the research, discussions and analysis done by BCG and several rounds of discussions held between the zonal railways and other stakeholders, the scheme is now ready for launch by bidding out 20 stations,” a senior Railway Board official said on condition of anonymity.

“These are the stations where investors will get a very good return on their investment.”

The stations for which bids will be invited include Lokmanya Tilak (T), Pune, Thane, Visakhapatnam, Howrah, Allahabad, Kamakhya, Faridabad, Jammu Tawi, Udaipur City, Secunderabad, Vijaywada, Ranchi, Kozhikode, Yesvantpur, Bangalore Cantt, Bhopal, Mumbai Central (Main), Borivali and Indore. Under the Swiss challenge method, a company can submit a development proposal to the railway ministry and any other company can give suggestions to improve and beat that proposal or submit a fresh proposal.

An expert committee appointed by the Indian Railways will accept the best proposal and the original proposer will get an opportunity to accept it if it is an improvement on the original proposal.

ET VIEW: Make Clear Rules

We need clear-cut norms in the bidding process. If investors suspect procedural opacity, they may not go ahead with their bids. Achange of norms and other parameters post-bidding needs to be avoided. It would give rise to allegations of give-and-take and attendant corrupt practices. A model PPP agreement needs to be put out in the public domain.