Cabinet likely to take a call on Concor land issue soon
After the Cabinet nod, an expression of interest (EoI) for the privatisation of the company will be floated within 10 days.
January 25, 2021 / 09:30 AM IST
To speed up the privatisation process of Container Corporation (Concor), the Union Cabinet is likely to take up a new land licensing fee policy for the Indian Railways, soon. This will be based on a new formula, through which the land lease rates for using railway land for an industrial purpose may be less than 3 percent.
According to a source aware about the development, a Cabinet note is already under circulation. After the Cabinet nod, an expression of interest (EoI) for the privatisation of the company will be floated within 10 days. Even if EoI is floated during the current financial year, the strategic sale is likely to happen in 2021-22.
In April, a new land licensing fee (LLF) was notified by the ministry of railways, based on which an LLF of 6 percent is being charged from Concor now. This was anticipated to increase at a rate of 7 percent per annum, factoring in inflation too. Before April, Concor was paying the land lease on a per container basis. For FY21, the ministry of railways has reportedly slapped a land fee of Rs 1,276 crore for 13 terminals so far, compared to a Concor expectation of Rs 460 crore.
“The new policy will have a softer plan, with rates less than 3 per cent and a lease period of 35 years, compared to 5 years. This will boost investor interest in the strategic sale,” said a source aware of the development.
It was in November 2019 that the Cabinet Committee of Economic Affairs decided to sell its 30.8 per cent stake in Concor, along with the transfer of management control to the buyer. The government owns 54.8 per cent stake in the company and based on current market capitalisation 30.8 percent is valued at around Rs 8,040 crore.
Tuhin Kanta Pandey, Secretary - Department of Investment and Public Asset Management (DIPAM), had said late last year that the EoI for Concor will be ready only after a final decision on LLF. For the current financial year, the government had set a divestment target of Rs 2.1 lakh crore, out of which only Rs 17,957.7 crore has been achieved so far.