As the Indian Railways look to improve its services without spending much, Indian Railway Station Development Corporation (IRSDC) will modernise the stations capable of fetching more money as reckoned by the Boston Consulting Group.

Broadly, the move involves letting third parties raise funds by commercially utilising space on railway premises – airspace on stations and land around the stations among others, on the lines of airport development.

Sustainability

The move comes in the backdrop of the government telling IRSDC to make itself viable, Sanjeev Kumar Lohia, Managing Director and CEO, IRSDC, told BusinessLine.

IRSDC will pick those stations first that generate surplus to ensure the projects do not drill a hole in the Railways’ till. IRSDC intends to explore various methods of payment based on interest of private sector.

“Our priority will be to take up those stations where we are likely to get a higher upfront payment,” Lohia said. If the stations are not very attractive, IRSDC will opt for a mix of upfront and deferred payment.

Different model

At present, the Railways has adopted various models to develop stations. One model is Habibganj railway station, near Bhopal, where one developer has been given all the responsibilities. The redevelopment rights were won by Bansal Construction Works Pvt Ltd (lead member) and Prakash Asphaltings and Toll Highways (India) Ltd.

Then, there is another model being followed for 10 stations, termed self-development model. In this model, NBCC will modernise the station, commercially develop them, and subsequently deal with the end users – who could be buyers of homes, shops or commercial establishments. NBCC has already started work at Chandigarh and Gomtinagar, a station near Lucknow.

Another model, followed for five stations is called the operations and management model, where IRSDC initially awards the rights to operate and manage the railway station to experienced companies. It is expected to be “low cost and high visibility” model.

Services at stations will be improved, Lohia said. The station modernisation work will follow. IRSDC has awarded operations and management work for five stations. The selected companies are: Knight Frank for Bengaluru, BVG (Bharat Vikas Group) for Pune, UDS (Updater Services) for Anand Vihar in Delhi, Secunderabad and Chandigarh.

IRSDC has roped in various Central public sector units to do the initial studies for station development. IRSDC Board, to be chaired by Member (Engineering), Railway Board, will have representation from Finance Ministry, NITI Aayog and Indian Railways.

Extended lease period

Not that the station modernisation path is without challenges. Last year, Railways had invited bids for 23 stations, with a large number of stations not getting any response.

Subsequently, the Cabinet took steps like allowing the lease period to be increased to 99 years. Another commercial utilisation project of Railways in Delhi’s Sarai Rohilla also faced challenges with the project getting cancelled within a few years of the Railways awarding the project.