Railway Ministry to float $5-bn fund for infrastructure projects
The Railway Ministry is in advanced stages of finalising a proposal to create a $5-billion fund to finance its various infrastructure projects. Once the proposal for floating Railways of India Development Fund (RIDF) is finalised, it will be placed before the Cabinet for its nod, Railway Minister Suresh Prabhu said on Saturday.
“There were certain hurdles that were to be cleared for the proposed $5-billion Railways of India Development Fund before we seek Cabinet approval. We are almost done with the structuring of the fund and hope we will be able to take it to the Cabinet soon,” Prabhu told a seminar organised by Indian Merchants’ Chamber.
The proposed fund, which will be anchored by the World Bank, will be of seven years. “Nearly 20 per cent of the fund will come from the Finance Ministry and we expect the balance from pension funds and sovereign funds,” said Railway Board (Resource Mobilisation) Executive Director Namita Mehrotra.
She said that the Finance Ministry’s share will come in the form of equity. “It is being planned that the World Bank will route the funds through the Finance Ministry, which will be invested in RIDF as equity. We are hopeful of receiving a good response from pension funds and sovereign wealth funds.”
Mehrotra said that the proposed fund will mainly invest in major infrastructure projects of the transport behemoth. Prabhu said that pension funds are keen to put money in the Railways as it is a long-term investment destination for them with assured long term returns and capital safety assurance.
The Government has also embarked on a mid-term plan for creating infrastructure and expects to spend nearly Rs 8.56 trillion through various funding sources. “Due to insufficient capital, expansion of infrastructure and capacity augmentation did not happen for a long time. But now we are working out on various initiatives whereby we will be able to raise funds not only through our core revenue streams — with two-thirds coming in from freight and the fares chipping in with just one-third — but also through non-fare income,” Prabhu said.
Life Insurance Corporation of India (LIC) had agreed to invest Rs 1.5 trillion in various commercially viable railway projects last year and out of the total, it has already invested Rs 10,000 crore so far. Prabhu said that the Railways will continue to explore the public private partnership (PPP) model for various plans, especially for those projects which are capable of repaying debt.
It can also be noted that, the Japan International Cooperation Agency has also agreed to provide loan of around Rs 1 trillion at 0.1 per cent interest for a 50-year tenure with a 15-year moratorium
for the Mumbai-Ahmedabad bullet train project.
AI Express flies to profit zone for first time since 2005 take-off
Air India Express, the low-cost international subsidiary of Air India, has turned profitable for the first time since it started operations in 2005. “As per the account placed and approved by airline’s Board of Directors (on 31st August, 2016), the airline has made net profit of Rs 361.68 crore in the fiscal year 2015-16 against the loss of Rs 61 crore registered in the year 2014-15,” an Air India Express release said here on Saturday.
Along with other factors, higher passenger load factor and better utilisation of its assets helped the airline achieve the positive financial result as the its fleet size remained at the same level of 17 aircraft as was the case in the previous fiscal, it said.
“The year witnessed passenger load factor of 82.3 per cent against 81.4 per cent the previous year while the average daily aircraft utilisation rose to 11.3 hours from 10.8 hours. The year, Air India Express carried 2.80 million passengers as against 2.62 million in the previous year,” the Air India subsidiary added in its release.
Prudent commercial and management interventions brought about an increase of 11.3 per cent in revenues. The airline has achieved total revenue of Rs 2917.96 crore in the last fiscal against Rs 2622 crore earned in the year 2014-15.
Focused efforts made towards ancillary revenue generation have also contributed to the enhanced revenues. “This turnaround is the outcome of the sustained efforts made by every member of Team Air India Express,” said Chief Executive Officer of Air India Express, K Shyam Sundar.
Thanking the increased passenger confidence in the airline’s services, he said it augurs well for the fleet expansion plans being implemented by the Airline. “The plan will see the induction of six aircraft in the current fiscal (April 2016- March 17), three of which have already joined the fleet in the first Quarter (April-June 2016).
The induction of three more aircraft by the end of third quarter will take the Airline’s fleet strength to 23 aircraft,” he noted. “Consequently the capacity offered and the Operating Revenues are expected to go up further by about 25 per cent in the fiscal 2016-17,” the release said.
This year witnessed the launch of the Airline’s operations from New Delhi to Dubai and Abu Dhabi and strengthening of its presence in North Indian markets and additional flight operations from its core markets in South India.