New Delhi, Aug 4 (IANS) The Railway Ministry on Thursday signed a Memorandum of Understanding (MoU) with the Chhattisgarh government for formation of a joint venture company for development of rail infrastructure in the state.
Railway Minister Suresh Prabhu said the development would accelerate the economy of the country.
"To meet the demands of the people it is better that all state governments join hands with the Railway Ministry. This is in line with the Prime Minister's philosophy of cooperative federalism," said Prabhu on the occasion.
Prabhu in his 2016-17 budget announced that his ministry would work in tandem with state governments for developing rail infrastructure.
Chhattisgarh Chief Minister Raman Singh said the expanding railway network in the state has helped it in processing natural resources.
"Around 760 km of additional railway lines have been spread in the state in a very short time. It has helped us (the state) in processing the natural resources to its full potential," Raman Singh said.
So far eight states have signed the MoU with the ministry while 17 other states have consented for the proposal.
According to the MoU, a joint venture company will be formed with 51 per cent share of the state government and rest with the ministry.
"The company will primarily identify projects and possible financing avenues in addition to the state and central government. After finances for a project are tied up, project specific Special Purpose Vehicles (SPV) shall be formed. These SPVs can have other stake holders from public sector undertakings," said a ministry statement.
"However, the joint venture companies shall be mandatory stakeholder with minimum 26 per cent share in the SPVs."
The most important aspect of the MoU is that the land ownership will vest with the SPVs so that it can exploit its commercial potential.
"At the end of the concession period, the railways will have option to take over the assets at nominal price," it added.
