Indian Railways Set To Kick-Start Largest-Ever Divestment Exercise, Targets To Raise Rs 25,000 Crore

The Indian Railways is set to kick-start the largest ever disinvestment exercise, which involves the monetisation of its power transmission lines, also called overhead equipment network, the Economic Times has reported.

Of the Indian railways’ 66,000-km network, 25,000 km is electrified.

According to the report, the railways is planning to raise at least Rs 25,000 crore from the disinvestment exercise. The proposal, which was mooted in the last fiscal, had failed to make progress because of reservations from senior officials. However, it has now been cleared by Railways Minister Piyush Goyal.

“Earlier, there were several reservations related to the proposal as such kind of divestment has never been undertaken by the railways. Also, we were apprehensive if the rail unions would agree to it. But now the air has been cleared and we are hopeful of going ahead with the proposal soon,” a railways official said.

According to the daily’s report, the government will likely set up a joint-venture (JV) of two public sector units to buy these lines.

“One of the public sector undertaking will be of the railway ministry and the other one could be from the power ministry. The JV would pay railways upfront and the national transporter will take these lines on lease and pay a fixed interest to the owner,” the report quoted a railways official as saying.

“Railways will continue to manage the operations and maintenance of these power lines, and it may be comfortable to pay around 7 per cent as interest rate,” he added.

The railways is planning to use the fund generated by disinvestment of its power transmission lines for electrification of over 30,000 km of its network. The railways has prepared a Rs 35,000 crore plan to electrify its entire network in the next four years. The cost of electrifying one kilometre of the rail network is around Rs 1 crore.