I am on a 5 week project assignment. I choose the topic of day dreaming for a world class railway station at lucknow. After having wandered about and talked to a lot of people on the subject, I have written a detailed report on the same titled “ Rethinking PPPs : Building a world class railway station. A case for Lucknow Charbagh station“.
What I propose is
a) Need for us to rethink PPPs on a fundamental level
b) World Class stations through PPP route are possible, but station use charge would be required. Even a nominal charge of Rs 10/- for unreserved passengers (10% of average ticket cost) and Rs 20/- for reserved passengers (4% of average ticket cost) CAN MAKE IT POSSIBLE.
The report is attached below. The executive summary is as below:
EXECUTIVE SUMMARY
There exists a ubiquitous need for the railways stations in India to change and they need to become more user friendly while leveraging the benefits of technology. Numerous proposals and reports exist for carrying out this much required up-gradation. Lack of funds often gets cited as the most important reason for these proposals not taking off, and ‘The PPP route’ is often suggested as THE solution. However, the poor performance of PPPs in the country does not bring confidence in this choice.
In this study, I reexamine the PPP concept from a definitional perspective, and question the path taken and the assumptions made in the nations PPP journey. I argue that whereas the primary PPP concept has only a few mandatory conditions, the subsequent understanding has converted them into a massive bundle of activities, governed by set of long term rigid contracts. This results in PPP based projects taking up a monolithic form for delivery of a monopolistic public service, and this entity getting transferred into private hands. Further, such entities are left to fend for themselves despite the imposed structural limitations, with little emphasis on ways to manage and resolve them. This path is identified as the source of many of the PPP problems in the country.
Departing from this route it is proposed that the complexity and uncertainty of PPP projects is required to be managed by converting them into numerous small modules, each of which independently and together form a flexible and adaptive entity. This is a standard route by which managers address complexity in organizations or alliances. While on one hand this breaks the large project into modules based upon size/scope dimensions to reduce their complexity, it also creates a market of PPPs by creating distinctive modules along the time dimension. A market of PPP, where PPP projects can get freely transacted, introduces the much required control system on PPP performance, based on market mechanisms. This approach is next shown to be consistent with the basic elements of the PPP concept and is also in line with the original thoughts which saw benefits of PPPs manifesting when a market of PPPs emerges.
The unique conceptual framework proposed is next interpreted in respect to conversion of a station into world class railway station. The context chosen is to convert Lucknow/ Northern Railway station into a world class facility. It is shown that by decomposing a large project of Rs 670 crore into small projects of Rs 200 crore or less, we can find viable PPP delivery modes for them. While the road infrastructure needs to be paid for by state governments and railways as a part of ROB/RUB access, the new station building can pay for itself as a commercial complex, the passenger amenities (waiting areas can be paid for by user charges) and parking lots can be worked on an independent PPP basis. Contrary to routine PPP proposals, cross subsidization here is frowned upon- you get what you pay for, such that responsibility and accountability gets properly matched. Parking a car needs to pay for itself, usage of station facilities is to paid for by station access fees and platform tickets, and road access is to paid for by users of the prime commercial property.
The justification for user charges follows from the analysis of users of railways stations. Preliminary figures show that the station is routinely handling 1-1.5 lac people per day, but needs to be upgraded to handle 2 lac passengers per day to cater to the peak loads. A railway passenger with reserved ticket was found to pay an average ticket price of Rs 500/-for his journey. Similarly, an unreserved passenger is proposing to pay Rs 100/- (on average) for his journey. Like airports, a station usage fees of Rs 20/- for reserved classes and Rs 10/- for unreserved classes, yields an additional revenue of Rs 70 cr per year, and is more than enough for what is required to provide world class facilities to our station users.
Besides proposing a conceptual departure in the PPP concept, the report also fulfills three other objectives. Firstly, it provides an updated inception report for making Lucknow station world class. This is quite in contrast to the original inception report which was written over 5 years back and is very sketchy in nature. Secondly, the report serves as a one stop place for an exhaustive reference list in regards to world class stations, as understood in Indian railways. And lastly, the report makes a broad and first cut business case for Lucknow station upgradation, opening up a platform for initiating a dialogue on how Lucknow station can be made world class and what all would be required to carry out an exercise.
Attachments:
Inception Reports for Railway Stations of Lucknow (Railway Document)
Swapnil Garg's home on the WWW 
The concept of PPP must first be clear to Indian Railways and thereafter extend it to stations after adequate customisation. PPP on IR somehow has morphed into a process whereby the private partner puts in the money and then lets IR manage. The concept of risk apportionment, allocation of managerial responsibilities, choosing the appropriate operational system and revenue sharing with a regulatory framework is alien to IR.
PPP on stations are basically broken into 3 broad types; stations with heritage buildings, large stations and medium stations. The stations management must have a local body involvement since all stations are primarily gateways to the city and any visitor must get the loocal flavour on alighting. Thus IR, the private partner and the local government all have stakes in the success of station development and management.. All the three can decide on another entity to develop and manage the station on a long term lease with oversight by the three stakeholders or they can manage the stations themselves.
An integrated approach is essential whereby the station SPV will manage with a long term clear arrangement indicating the railway requirements, commercial development areas and the complete station is built around these needs suiting the local culture for full integration with the city. The integration with the city is essential for the residents to take pride in the station and become virtual stakeholders.
Stations which have heritage building must have a separate managment system obviously and must involve organisations dealing with restoration, heritage preservation along with station development. This is a specialised area and must be done with appropriate expert guidance.
The revenue generation should be a clear aim with its sharing clearly laid down along with renegotiation rules in case the revenues either far exceed expectations or fall very much lower than planned. Debt restructuring over time should also be planned to ensure that project outflows remain under control.Once all these are taken care of then only the project has a good chance of taking off successfully.