Railway land use policy may be tweaked for Concor selloff

The move is expected to facilitate strategic divestment of government-owned Container Corporation of India Ltd (Concor) by making the deal more lucrative for players.

The proposed reduction in LLF was sought by private players and the proposal would soon be taken to the Cabinet for its approval, a senior government official told ET.

The railway ministry is also likely to extend the duration of the lease period to 20 years from existing five years.

“Railways has agreed on reducing the land licensing fee to 3.5% for Concor post divestment,” the official said.

An agreement on the proposed changes was reached at a meeting last week attended by officials from the Department of Investment and Public Asset Management (DIPAM), the railway ministry, Concor and NITI Aayog.

Concor, under the aegis of the railway ministry, is engaged in transportation and handling of containers.

The firm is also engaged in the operation of logistics facilities, including dry ports, container freight stations and private freight terminals. Currently, it has 61 container depots, out of which 26 are on railway land leased on a per container licence fee basis.

The Railway Board in its policy dated March 19, 2020, notified an LLF regime for industrial use of its land and extended the same to Concor. As per this policy, the transporters have to pay 6% of the land value in the first year of licence, which increases by 7% every year.

There was no clarity on whether the same fee would be applicable once the PSU is divested.

Officials in DIPAM said that many potential buyers had pointed out at the licence fee being too high and sought reduction to 3%. However, the matter was stuck as the railways was reluctant to slash the fee.

The ministry is working on a detailed proposal and it will be sent to the Cabinet for approval. The government can then issue an expression of interest for Concor.

In November 2019, the Cabinet had approved strategic sale of 30.8% stake in the company along with management control out of government equity of 54.80% in the company. The government is planning to retain 24% stake post divestment.

The Centre has budgeted ₹65,000 crore from divestment proceeds for the current financial year. It is expecting to raise ₹8,000 crore from Concor divestment as per current valuation.