Report by Kamgar Ekta Committee (KEC) correspondent
IR has been examining various options for monetizing assets of the Dedicated Freight Corridor Corporation Ltd (DFCC) since the Finance Minister’s announcement in the Budget Speech for 2021-22. She had announced, “Railways will monetise dedicated freight corridor assets for operations and maintenance, after commissioning. The Sonnagar-Gomoh Section (263.7km) of Eastern DFC will be taken up in PPP mode in 2021-22. Gomoh-Dankuni section of 274.3km will also be taken up in short succession.”
IR has been constructing two Dedicated Freight Corridors (DFC), the Eastern Dedicated Freight Corridor (EDFC) from Ludhiana, Punjab to Sonnagar (1337 Km) and the Western Dedicated Freight Corridor (WDFC) from Jawaharlal Nehru Port Terminal (JNPT), near Mumbai to Dadri, Haryana (1506 Kms.).
By 1st March 2021, 1110 km out of the total sanctioned length of 2843 km of DFC has been completed and Rs 74,788 crore had been spent for the construction. Only 657km had been commissioned by March 2021.
DFCC will offer higher transport output and carrying capacity due to faster freight trains, heavy haul trains and running of double stack container trains. This will reduce the unit cost of freight transport substantially.
IR appears to have finalized the Infrastructure Investment Trust, InvIT, model for the monetization of DFCC assets. This model has already been used to monetize assets of the Power Grid Corporation of India (PGCI) and National Highway Authority of India (NHAI).
An Infrastructure Investment Trust (InvITs) is a collective investment scheme similar to a mutual fund. While mutual funds invest the capital received in financial securities, like shares, bonds, etc., an InvIT invests the same in real infrastructure assets like railways, roads, power plants, transmission lines, pipelines, etc. However, an InvIT is required to invest in already completed and running infrastructure projects.
Like mutual funds, individuals, capitalists, corporates, and financial institutions can invest in InvITs. The long-term, typically 15-20 years at least, income generating assets of an enterprise are transferred to an InvIT. The InvIT is required to distribute 90% of the income generated by its assets to its investors on a regular basis.
The enterprise creating an InvIT receives capital from investors for giving up its income to investors. Investors also gain through appreciation in the value of InvIT on the stock market.
IR will transfer the ownership of operational assets such as track signalling overhead equipment (Track OH, rail tracks, good sheds, etc. of the East and West Dedicated Freight Corridor Corporation (DFCC) to the proposed Railway InvIT and thus cease to be the owner of these assets. The assets will be owned by the trust which will be owned by capitalists who invest in it.
So, the InvIT model is nothing but another form of privatisation. In the case of DFCC, even before both the corridors are fully completed using public money, its privatisation has begun.
Rail workers have to take note of various ways of privatisation of IR adopted so far, from outsourcing to InvIT. Each of them has to be opposed irrespective of the name or form.