
Indian
Railway Stations Development Corporation Limited (IRSDC), is a State-Owned
Enterprise (SOE) jointly owned by two other SOE of Ministry of Railways, India.
It endeavors to be a leading organization in the field of development,
redevelopment, operation and maintenance of railway stations with passenger
amenities of international standards.
World
Association of PPP Units & Professionals (WAPPP) endeavors to collect and
publish PPP reviews, standards, case studies and other relevant information. They
continue to provide online forums and organize international meetings for the
exchange of knowledge, advice and ideas on multiple topics of interest to both
public- and private sector PPP practitioners.
To understand
the work being done a discussion with Mr. S.K Lohia, MD & CEO of IRSDC was
held online with Mr. Naresh Bana, Member of Executive Committee, Treasure and
Chair of the Editorial Board of WAPPP, on 18th September 2020 at
12:15 pm for 30 Minutes approximately. Latest updates of ongoing projects and future
plans of IRSDC were shared. Mr Lohia mentioned that Habibganj and Gandhinagar
Railway stations in Gujarat are scheduled to complete in December 2020. These
two stations may be models of such PPP projects being planned by them. Even
during/due to pandemic the projects are progressing adequately.
Elaborating
on the impacts of pandemic he said the financial model of ongoing PPP projects
may suffer for a brief period but overall, the viability of PPP projects will
not be affected as railway stations continue to be hub of activity. Except for construction
delays the EPC projects are not likely to suffer any adverse effect.
IRSDC have
been using ‘Swiss Challenge Approach’ and conventional procurement procedures
for bidding out the station development projects. The land use model provides concessionaires
with full usufruct rights and all other provision for commercial exploitation of
the railway station land except that land cannot be mortgaged. It seems to be
working well with prospective partners.
The
draft model concessionaire agreement (MCA) as available on the website of IRSDC
was discussed. It was clarified that there is no exclusive regulator as of now but
the same may be appointed in future. The user fee is being laid down upfront at
the RFP stage to avoid need for adjudication at any later date. It was also updated
that in the current dispute resolution process the second stage of conciliation
is between Authority and SPV instead of GM, Zonal Railway and SPV as mentioned
in the draft MCA. At present there is no elaborate insurance compliance for the
life cycle of PPP. The concessionaire is free to obtain insurance as per risks envisaged.
It is also optional for concessionaire to follow the international
Environmental, Social and Governance (ESG) norms.
IRSDC
is constantly seeking foreign investment and recently the Chairman Railway
Board along with ‘Invest India’ had a long discussion with prospective foreign
investors and invited them to participate in the ambitious station development
program. Mr Lohia was forthcoming and positive for future participation in such
events to showcase their work and learn from failures of such projects
worldwide as may be known to WAPPP members.
To
enhance investment acceptability of IRSDC projects and on behalf of WAPPP Mr
Naresh Bana shared his following inputs :-
a.
Risk allocation as seen in the draft MCA of
IRSDC appears asymmetric with most of the risks being allocated to the
developer/concessionaire. It needs balancing.
b.
International investors depend on the type and
extent of insurance available to cover various project risks. The current
insurance cover of IRSDC projects appear inadequate. It appears to be a pan Indian
phenomenon as also noted by the ‘World Bank’ while commenting on the modified
MCA of port development in 2018 in India.
c.
Dispute resolution mechanism needs to be
preceded with dispute avoidance provisions in each sub activity of entire PPP.
That may be able to arrest the points of difference before those turn into disputes.
In the arbitration phase the SPV should be allowed to suggest arbitrator of their own choice and not restricted to choosing
from those arbitrators who are empaneled with IRSDC.
d.
Railway stations after development are going to
be the place frequented by people and thus ESG aspects need to be integrated
thoroughly and prominently in future projects.
The
online meeting completed on a positive note with both participants indicating future
engagements for knowledge sharing and capacity building. The video link of the meeting is given below.