September 19, 2021

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Railways tweaks model contract document for private players to redevelop stations

The railways have made a slew of changes in its model contract document for private players to redevelop railway stations, bringing down the concession period from the earlier 60 years to 35-40 years. In general, concession period is the span of time granted by the government to the private sector within which the private sector is responsible for the financing, construction and operation of a BOT (build, operate and transfer) project.

The new draft Model Concession Agreement (MCA) prepared by the Rail Land Development Authority (RLDA) has also made provision of single and well-defined payout which can be easily monitored with no upfront cashflow burden for the private entities.

“Subject to and in accordance with the provisions of this agreement, applicable laws and the applicable permits, the authority hereby grants to the concessionaire the concession set forth herein including the exclusive right, licence and authority to construct, operate and maintain the railway station [and the exclusive rights, licence/lease rights for station estate development as per the station estate lease deed for a period of [30 (thirty)/45(forty five)] years commencing from the appointed date,” the document states.

It has a provision where the developers will also offer rebate in case the railway makes the payment within three days of the deadline.

Similarly, private companies bidding for the redevelopment of railway stations will get compensated if the railways delays the payment of station development fee by more than a week.

Recently, the Ministry of Railways, RLDA and IRSDC held consultation with various stakeholders in connection with finalisation of MCA for station development through PPP mode.

The new draft has also made provision and based key performance indicators on outcome based rather a prescriptive approach.

The draft has introduced the Station Quality Index to measure KPI by an independent agency.

The new draft has also removed obligations related to employment of foreign nationals, trained personnel and others stating that these will be covered under applicable laws and permits along with standards and specifications.

The draft also allows co-branding but states that the railway station shall always be known, promoted, displayed and advertised by its official name.

“However, concessionaire may develop and implement a co-branding programme duly keeping in view various aspects like public good, information clarity, aesthetic looks, vibrant character, facade, safety, identity of authority and concessionaire subject to guidelines issued by Ministry of Railways on co-branding, if any, and get it approved from authority through independent engineer?” it said.

The main source of income from such development would be through the station development fee, which will be shared between the developer and railway and the company quoting the highest share for railway, will get the bid.

RLDA is a statutory authority under the Ministry of Railways with a mandate to develop and monetise surplus railway land, colony redevelopment and station redevelopment across the country.

RLDA is presently working on 112 stations, 84 colonies and over 100 greenfield commercial sites for the development and monetisation.

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