Cabinet nod for JV with states for rail projects

Cabinet nod for JV with states for rail projects
The Union Cabinet on Wednesday gave a go ahead to the formation of Joint Venture (JV) companies with states to execute rail projects.

The JV formed with Indian Railways and the concerned state as partners will have an initial paid up capital of Rs 100 crore. The Ministry of Railways’ initial paid up capital will be limited to Rs 50 crore for each state. Further infusion of fund or equity shall be done after approval of the projects. 

About 17 states including Karnataka have so far consented to collaborate with the railway ministry for implementing rail infrastructures in their respective states. Four states, Odisha, Maharashtra, Andhra Pradesh and Kerala have signed such MoUs.

In the JVs, there would be 51 percent stakes of the respective state governments and 49 percent stakes of Ministry of Railways. Thus, the JV companies shall be fully owned by the government. The companies will primarily identify projects and possible financing avenues. 

The JV can also form project-specific Special Purpose Vehicles (SPVs) with equity holding by Banks, ports, PSUs, mining companies and others.

“The joint venture exercise would ensure greater participation of state governments in implementation of railway projects in terms of both financial participation as well as decision-making process,” said the ministry.

“This will also facilitate in faster statutory approvals and land acquisition. Besides travelling people, various cement, steel, power plants and other companies would get necessary rail link for transportation of their raw material and finished products,” it added.
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