Fast action for semi high-speed rail: Finance Ministry gives green light, project expected to be profitable in third year

THIRUVANANTHAPURAM: The Finance Ministry has approved the recommendation of the state to take over the Rs 33,700 crore foreign loan liability for the Thiruvananthapuram-Kasargod semi-high speed rail. The consent form will be sent to the Centre soon with the approval of the Cabinet. After the Railway Minister openly told the Chief Minister that the Center will not bear the debt liability, things are moving smoothly here.

Semi-high-speed rail is expected to be profitable in the third year. According to KRDCL, the project operator, the proceeds of the ticket will be used to repay the loan.

The initial assumption was that the central government would provide 49 percent guarantee and the state 51 percent guarantee for the repayment of the foreign loan. After getting the state guarantee, a 100 percent guarantee is usually provided by the centre. With the withdrawal of the Centre, the state should inform in writing that the repayment liability will be fully borne by them. Failure to repay will result in a deduction from the Central share to the state.

The Centre is not turning its face from Kerala alone in debt liability. Ahmedabad-Rajkot (320 km) and Pune-Nashik (250 km) semi-high speed projects are also not covered by the Centre. Maharashtra Chief Minister Uddhav Thackeray has told the Centre that the state has taken over Rs 16,000 crore liability of Pune-Nashik.

Questions and answers

1. Minister of Railways: Railways cannot be liable for the repayment of loans. The project should be made profitable and the liability should be reduced. Or how to repay?

CM: Public transport projects are not profitable anywhere in the world. In addition to ticket revenue, an urban development plan will be created. Railways will gain 14 percent through shares. The state will be liable for the loan.

2. Railway Minister: Is it possible that the construction cost will go up to Rs 120 crore per km?

CM: The cost is Rs 120 crore including land price. When Niti Aayog suspected that it would be Rs 256 crore per km, documents and facts were presented. The clearance for loan consideration after confirming this.

3. CM: The Railways should give final approval for the project and give 2150 crore shares

Railway Minister: Should approach the Central Government for share. Budget allocation should be sought. We will meet again after the official level discussion.

1946 crore - Annual repayment of loan

The loans have a repayment period of 25 years