In a flip-flop, Container Corporation of India Ltd (CONCOR) has dropped its plan to shift to the Gati Shakti Cargo Terminal (GCT) policy for running terminals built on Indian Railways land, Chairman and Managing Director, Sanjay Swarup has said.
“If brownfield terminals migrate to the Gati Shakti Cargo Terminal policy, then there is a big element of uncertainty. So, we have decided that we will not be using that facility provided by Indian Railways. But, for greenfield terminals built on Indian Railways land, we are going for Gati Shakti policy only,” Swarup added.
In May 2024, CONCOR said it had applied to the Ministry of Railways for migrating the licensing regime of its flagship inland container depot at Tughlakhabad near Delhi to the new Railway land management policy/Gati Shakti Cargo Terminal scheme approved by the Union Cabinet in September 2022. The shift was aimed at helping the state-run rail hauler lower its land license fee (LLF) outgo to the Indian Railways by as much as Rs 120 crore to less than Rs 300 crore a year.
In FY24, CONCOR paid Rs 424 crore as land licence fee to the Ministry of Railways for running 26 terminals built on land leased from Indian Railways. These 26 terminals account for more than half of the annual revenue of CONCOR.
Out of the land license fee of Rs 424 crore paid by CONCOR in FY24, the Tughlakhabad terminal alone accounted for Rs 360 crore or some 60% of the total LLF payout.
Mumbai-listed CONCOR currently pays land lease charges at the rate of 6 percent per annum on the market value of industrial land with annual escalation of 7%, for terminals run on Indian Railways land.
According to the Gati Shakti Cargo Terminal policy cleared by the Cabinet, the land lease charges will be levied at 1.5% of the market value of industrial land per annum with annual escalation of 6%. The Indian Railways will lease land for running cargo terminals under the policy for a maximum of 35 years.
Besides, the terminals operating on Indian Railways land (prior to the policy) have been given the option to migrate to the new land licensing regime.
For this, it will have to go through a tendering process to avail the benefit of lower land lease charges, in which the existing operator will have a socalled right of first refusal if it is not the highest bidder.
The GCT policy comprises a fixed LLF component levied at 1.5% of the market value of industrial land and a variable component linked to the number of trains operated.
CONCOR had reckoned that the migration to the GCT scheme in the current financial year would drastically cut the LLF for the Tughlakhabad terminal alone to around 60-65% of what it was paying.
Additionally, in FY24, CONCOR surrendered some 60,000 sq metres of land at the Tughlakhabad terminal to the Indian Railways, a move that has cut the LLF payout per the existing regime by about Rs 30 crore a year.
“Based on the current regime, the total LLF payout will not be more than Rs 420 crore for this fiscal. If CONCOR enter the GCT scheme for the Tughlakhabad terminal, the Rs 360 crore LLF (for Tughlakhabad facility alone) will come down by 40% to nearly around Rs 240-250 crore. So, about Rs 100 crore savings will accrue only from Tughlakhabad terminal. And once we are able to do it for the Tughlakhabad terminal, the whole plan is to
proliferate the same mechanism for the remaining 25 terminals run on IR land,” the then Finance Director Manoj Dubey told analysts in May 2024.
If things panned out as per this plan, the total LLF payout will reduce by some Rs 100-120 crore to less than Rs 300 crore a year in the coming years, Dubey said at the time.
While the LLF will be less, container train operators say that Indian Railways will wield greater control over terminals operating under the GCT policy.
“Terminals operating under the GCT policy will be common user facilities, allowing players other than the one running it to also bring trains there, creating chaos,” an industry source said.
The absence of a rail regulator was adding to the woes.
“Without a regulator, things become very discretionary for Indian Railways. We don’t want to give any lever to the local Railway personnel to create problems,” the industry source said, noting that undergoing the bidding process during migration was “not too much of a worry since the existing operator has the right of first refusal”.
“But, without a regulator, we have multiple players operating trains, and it will become discretionary,” he added.
For greenfield terminals, CONCOR is acquiring land on its own or taking Indian Railways land under the GCT policy per requirements. It has taken two parcels of Indian Railways land per the GCT policy for constructing terminals at Mandalgarh in Rajasthan and another near Haridwar.
(source: ET Infra)
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