User Charges for Redeveloped Stations to be Inflation-linked: IRSDC

The railway ministry is working on the definition of the ‘user charge’ that will be levied on passengers for using revamped stations under the government’s ambitious station redevelopment programme. The formula for the user charge will be inflation-linked, SK Lohia, Managing Director and Chief Executive Officer of state-owned Indian Railway Stations Development Corp. Ltd (IRSDC) said on Tuesday (18th August 2020).

A pre-determined user charge on passengers, income from real estate as well as charges levied on vendors for setting up of kiosks on the platforms will be will be key revenue streams for the concessionaire of the redeveloped stations.

“User charge will be a pre-determined charged linked to inflation and will be clearly stated in RFP (request for proposal) document, so that (private) companies are able to make a financial model based on it,” Lohia said at a virtual briefing.

“When you are giving someone a station for 60 years, it is not fair to give them a charge cast in stone. It must go up or down depending on market realities. So that if inflation increases, there will be a formula for how much it will reflect on the cost,” Lohia said.

“Earlier we were only dependent on real estate for revenue, now user charges have also been taken in. This brings in some kind of certainty of revenue,” He added.

Lohia further added that private sector participation in station redevelopment projects has been quite encouraging. Nine companies, including US-based I-Squared Capital, GMR, Kalpataru Group, FairFax, have been shortlisted for redeveloping the Nagpur, Gwalior, Amritsar and Sabarmati railway stations.

Earlier this month railway board chairman Vinod Kumar Yadav had said that redevelopment of of Habibganj, Bhopal and Gandhinagar stations is likely to be completed year-end. “For 50 more stations, the tender will be finalized in this financial year. The six tenders that have been opened got a good response. This is another way of financing the development of the stations to make it world class, without putting any money from the government,” Yadav had said in an interview.