Suburban rail SPV to take shape in a month

According to the source, lack of financial power may affect the implementation of the project as the SPV will be forced to take the government’s nod in every step. DH file photo

The state government has given its nod for formation of a special purpose vehicle (SPV) to implement the much-delayed suburban rail project but has refused to give “enormous powers” sought in the proposal.

Chief Secretary T M Vijay Bhaskar said Chief Minister H D Kumaraswamy approved the memorandum of association (MoA) and articles of association (AoA). “This was communicated to (K-RIDE chief executive officer) Sirra Gagarin to proceed for the registration of the SPV,” he said.

The government’s decision was communicated to Karnataka-Rail Infrastructure Development Corporation (K-RIDE), which has been given the task of setting up the SPV, by the Infrastructure Development Department Additional Chief Secretary Sandeep Dave.

The letter, however, noted that the approval is subject to the condition that K-RIDE adheres to the opinion of the law and finance departments.

The finance department takes exception to several clauses in the MoA, which confer “blanket powers like purchasing, selling taking on lease and mortgaging movable and immovable property”. The department, however, refers to “stipulated amount” allowing the possibility of the SPV to make independent decisions regarding projects within a fixed amount.

Sources in the government said the problematic clauses have to be dropped before going ahead to register the SPV. “The amended MoA has to be approved by the K-RIDE board members before approaching the Registrar of Company,” an official said, adding that the SPV, Bangalore Integrated Rail Infrastructure Development Enterprises Limited (B-RIDE), can come into effect in a month.

The source noted that lack of financial power may affect implementation of the Rs 27,000 crore project as the SPV will be forced to take the government’s nod in every step.

Urban transport activist Sanjeev Dyamannavar, however, said that since the project components receive approval at DPR stage, the approvals may not be delayed significantly. “The Central government should reciprocate. It is time for the prime minister’s office to withdraw all its conditions and take proactive measures to give a push the project,” he added.

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