Odisha, Railways sign agreement to take rail link to Nabarangpurhttps://indianexpress.com/article/india/india-news-india/odisha-railways-sign-agreement-to-take-rail-link-to-nabarangpur/

Odisha, Railways sign agreement to take rail link to Nabarangpur

The MoU for setting up a Special Purpose Vehicle (SPV) is expected to result in at least six or seven rail projects in the state.

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Railway Minister Suresh Prabhu at the signing of the MoU at Rail Bhawan in New Delhi on Wednesday. (Source: Express photo by Renuka Puri)

The Odisha government and Ministry of Railways on  Wednesday signed a Memorandum of Understanding (MoU) to develop a railway link to reach India’s poorest district,  Nabarangpur.

The MoU for setting up a Special Purpose Vehicle (SPV) is expected to result in at least six or seven rail projects in the state, including a 40-km link connecting the Nabarangpur district headquarters to the nearest station at Jeypore in neighbouring Koraput district.

The MoU envisages the formation of a joint venture company having 51 per cent stake from the Odisha government and 49 per cent stake of the Ministry of Railways. The company has been entrusted with identifying projects and arranging possible financing avenues. After finances for a project are tied up, a project-specific SPV is to be formed.


While this SPV can have other stakeholders from central PSUs, state PSUs and others, the joint venture company shall be a mandatory stakeholder with minimum 26 per cent shares in the SPV.


Nabarangpur in southern Odisha is the subject of a year-long assignment by The Indian Express titled District Zero, with lack of rail connectivity emerging as a major drawback that has hampered economic growth and led to vacancies in government hospitals, schools and administration.

As per the contours of the MoU, the Ministry of Railways will sign a concession agreement of 30 years with the project SPV for safe and sound operation, revenue sharing and providing technical and marketing logistics to the SPV. The revenue sharing shall be based on an already established formula being used for inter zonal apportionment of revenue.

“The most important aspect of this MoU is that the ownership of the land shall vest with the SPVs, which is a departure from previous practice. This will give financial leverage to the company to exploit commercial potential of the land. This is also likely to result in making projects viable which are otherwise not viable,” said a Railways official. At the end of concession period, the Railways will have the option to take over the assets at a nominal price.

This is in line with average codal life of the assets as most of the assets will need largescale replacement after 30 years.

Speaking on the occasion, Railway Minister Suresh Prabhu said the step will go a long way in infrastructure development in Odisha. Such joint venture companies, he said, will provide the necessary impetus for faster growth of railway network in various states, including Odisha.

MoS (Independent Charge) Commerce and Transport, Odisha, Ramesh Chandra Majhi said signing of the MoU was “a landmark initiative” and that the concept of joint companies with respective state governments for executing such joint sector projects was a welcome step.