Karnataka prepares to set up suburban rail SPV

Expediting the process to set up a special purpose vehicle (SPV) to implement the suburban rail project, the state government is all set to change the shareholding pattern in Rail Infrastructure Development Company Karnataka Limited (K-RIDE).

In May, the Railway Board had agreed for setting up the SPV through K-RIDE, an organisation formed to implement rail infrastructure projects with private participation.

However, the railways urged the government to change the shareholding pattern in K-RIDE, in which another company (iDeCK), where private players hold major share, is a constituent.

Sources in the government said it now has 51% of the share in K-RIDE, which will help in streamlining the decision-making process.

“For the suburban rail SPV, the government has sought autonomy. Like the corporation for Namma Metro, it will have powers to fix fares,” the source added. A senior official pointed out that this was in line with the suburban rail policy guideline framed by the Ministry of Railways.

“In case an SPV incurs loss or can’t repay the loan, the responsibility is borne by the state government. So, autonomy is essential for the SPV so that it can manage its finances effectively,” the official said.

Another official noted that the law and finance departments have ratified the K-RIDE board’s decision before things could move forward.

He said the government will also decide on funding 50% of the cost of two doubling projects worth Rs 546 crore.

According to the proposal, the suburban rail SPV will have 40% equity and 60% borrowings which have been equally shared between railways and the state government.

The suburban rail network, proposed on the basis of a recent RITES survey, is 161 km in length, of which 72.47 km will be elevated section. The railways has proposed to build an elevated section to minimise the necessity for land acquisition.