MoU between Ministry of Railways, Ministry of Coal and Odisha Government - Recommendations

MoU between Ministry of Railways, Ministry of Coal and Odisha Government – Recommendations

Question - Recently, FM Arun Jaitley said coal needs to become greener and he asked for assistance through technologies to ensure this. Discuss the key recommendations of MoU signed to form a JV for evacuation of coal in India.

About the MoU between Ministry of Railways, Ministry of Coal and Odisha Government

• This MoU was signed between the two ministries and the Odisha government for the formation of a joint venture to:

- Undertake project development
- Assist in financing
- Implementation of identified projects for evacuation of coal through rail

• MoU was signed by Dr. A.K. Dubey, additional secretary Ministry of Coal. Dr. Sunil Bhargava, Chief Resident Commissioner. Government of Odisha and Shri. Girish Pillai, Adviser/Infrastructure Railway Board

• Ministry of Railways, Ministry of Coal and Government of Odisha will participate in equity
through own or nominated PSUs, for the MoU

• Ministry of Railways has nominated IRCON

• Developers of corridors shall be implemented via proposed JV

• They can also be implemented through separate specific JV companies/SPVs as per IR standards

• JV will have 64% shareholding from the coal ministry/its PSU, 26% from the Rail ministry’s PSU and 10% from the Government of Odisha/its PSU

• Project specific JVCs will facilitate participation of:

- Private investors
- Project Promoters
- Other stakeholders including state governments in project including equity

Recommendations of MoU

• JV will have authorised share capital of INR 1000 crore and initial paid up capital of INR 50 crore

• JV/JV companies shall enter into specific project concession agreement with rail ministry

• Acquisition of land for the project should be through JV or JV companies

• Entire cost of land shall be borne by JV/JV companies

• Land acquisition and environmental/forest clearances shall be provided by Odisha government for this project

Facts and Stats

• Coal sector is the largest customer of Indian Railways

• 50% of total generation of 2/3rd freight earning comes from coal transportation

• There is need for greater synergy between state governments and ministries and this MoU is beneficial for all 3 stakeholders

• Production of coal in our country has increased in recent times

• It is estimated that by 2020, coal production of India as a whole will be 1.5 billion tonnes

• MoU will facilitate proper evacuation, transportation and utilisation of vast coal reserves

• Due to this partnership, freight traffic of the Indian Railways is likely to rise by 15%