Upfront fee for wagon lease being planned

MUMBAI/NEW DELHI: Private companies interested in leasing railway wagons may face an entry barrier. Under the new wagon lease policy of Indian Railways (IR), they may be required to pay an upfront fee to IR to get the licences. This fee could be 10-15% of their turnovers, according to official sources. The policymakers reckon that the fee would ensure only serious players are in the fray.

“We are thinking of introducing an upfront fee on companies interested in leasing out wagons to IR to protect the interests of IR,” said a Rail Bhavan official. “We are in talks with companies interested in this business. Details will be finalised only after these negotiations are over,” added the official.

According to sources, the railway board is in a fix, figuring out the role of the Indian Railway Finance Corporation (IRFC) in the total scheme of things. IRFC makes available wagons to IR at the lowest lease rates in the world today. In the event the sector is opened up to other private players, the effect it will have on IRFC will have to be considered. Reason enough that the policy has taken a longer time to take shape.

Companies interested in wagon leasing business, though, have not taken this measure in their stride. “We have suggested that instead of a blanket rate for all companies, IR should be looking at charging a fee on the basis of scale of operations of the company. The higher the scale the lower should be the rate,” said an official of a company interested in availing the licence.

The wagon lease policy, promised by the railway minister in his last budget speech, will enable firms, except IRFC, to lease wagons to private operators and allow them to run it on IR systems.