To reap maximum benefit from its station redevelopment programme, the railway ministry plans to increasingly turn towards a 90-year lease structure for developers.
''If we increase the lease period to 90 years, the benefits multiply by 1.5 times. The current approval from the cabinet is for 45 years … once we have tested the market with this current lot of 23 stations, in the next lot we will approach the cabinet to allow us to lease for 90 years,'' a railway ministry official told The Financial Express requesting anonymity.
The Indian Railways is all set to start work on the first railway redevelopment project at Habibganj in Bhopal, Madhya Pradesh, and simultaneously put 23 more stations up for tender. The stations include Pune, Howrah, Kanpur Central, Chennai Central and Bandra Terminus, among others.
The Railways plans to redevelop more than 400 stations on a public-private-partnership basis to provide modern amenities such as cafes, walkways and holding areas for passengers. Under the current structure, a developer will get a commercial lease for 45 years and the maintenance contract will be provided for 15 years.
A 90-year lease formula has only been allowed for Surat and Gandhinagar, both in Gujarat, on a case-to-case basis.
Explaining the rationale, the official said, ''If you sell land, you get the full potential value. However, if you lease for shorter period, you do not get that much revenue. Leasing for 90 years is as good as sold and you reap full potential.'' He added the Railways intends to lean more towards the 90-year lease period if the cabinet allows it.
According to Arunendra Kumar, former chairman of the Railway Board, though 90 years is a long lease period, it may attract quality investment. ''It may attract serious and good investors who will shell out more because they will have ownership for a longer period,'' he said.
He added whatever be the lease period, it should be ensured through clauses that the property returns to the railways after its expiry.
The station redevelopment programme, which aims to monetise land assets around stations and the airspace, has attracted interest from entities from Malaysia, South Korea, Germany, France, Italy, the UK and Belgium.