The Orange City is on the cusp of witnessing a new era of urban development and infrastructure financing as the Government has recently embarked on an ambitious project on its land under the public private partnership model. For the first time in the city’s history, Indian Railways (IR) has initiated steps to build modern housing for its staff in place of the British era Bellyshop Railway Colony on Kamptee Road in return of offering a portion of its land to a private player on a 99-year lease. The Rail Land Development Authority (RLDA), a statutory authority under the Ministry of Railways, has invited bids for leasing 19,952 square meter (about 4.93 acres) of prime location Railway land, first-of-its-kind attempt by the authorities in the city.

 

The land located in the heart of the city on Kamptee Road is well connected with Metro Rail. It is also very close to Nagpur Railway station. Under the project, the chosen private developer will have to construct 241 residential flats with an investment of Rs 75.41 crore and hand it over to the Railways. In the next phase, the private developer will have the opportunity to make commercial use of the remaining area. RLDA has reserved 35 per cent of the total land for commercial use and 65 per cent for residential purposes. It is important to note that the RLDA has set a reserve price of Rs 116.50 crore in terms of Net Present Value (NPV) for the city project. The NPV represents the minimum acceptable value of the total revenue share that a bidder must guarantee to pay over the entire lease period. Finally, the RLDA is also demanding 15 per cent revenue share. Explaining the financial details of the project, one of the city-based developers and builders told The Hitavada that the Indian Railways has estimated the cost of 4.93 acre land at roughly Rs 200 crore, nearly Rs 40 crore per acre.

 

“The RLDA is expecting the builder to invest Rs 75.41 for building the residential flats and pay Rs 116.50 crore. There are other expenses too, which the builder has to incur. Further, the builder will also have to pay 15 per cent of the revenue to the RLDA,” said the builder who had attended the off-line pre-bid meeting with RLDA authorities on February 11. Sources said that 15 renowned developers and builders of the region had attended the meet. The Government has set-up RLDA for development of vacant Railway land for commercial use for the purpose of generating revenue by non-tariff measures. RLDA has recently come up with the Revenue Share Model under which the authority provides land and the developer undertakes planning, development, execution, and marketing, with revenues shared transparently. The model ensures long-term returns for Indian Railways while aligning public and private sector interests through performance-linked outcomes.