KOCHI: Even as the proposed Kerala high-speed railway banks on crowdfunding for 40% of its Rs 60,000-crore project cost, a significant portion of that financing is expected to be mobilised through institutional investors and green bonds, according to sources associated with the project.
The financing model outlined by Delhi Metro Rail Corporation (DMRC) envisages Rs 24,000 crore being raised through crowdfunding, while the remaining Rs 36,000 crore would come as equity participation from the Centre and the Kerala government in a 51:49 ratio. Kerala’s share of the equity contribution is estimated at around Rs 17,600 crore.
Sources said the crowdfunding component is likely to be executed through a combination of green bonds, infrastructure bonds, institutional placements, and community participation. Since the project is being positioned as the world’s first ‘green rail corridor’, powered entirely by renewable energy, it is expected to qualify for green financing instruments that generally attract strong investor interest.
“Green bonds could constitute a substantial portion of the funding. Such bonds are typically issued for environmentally sustainable infrastructure projects and can attract institutional investors such as LIC, State Bank of India and other major financial institutions. International development finance agencies may also participate either through debt or equity investments,” a source familiar with the proposal said.
Expat Malayalis show interest in proposal
The funding is expected to be raised in sequential tranches through a special purpose vehicle (SPV) to be formed jointly by the Centre and the state. The project’s long gestation period and estimated payback horizon of nearly 25 years make innovative financing crucial. Sources pointed to the successful use of tax-free infrastructure bonds by Konkan Railway as a possible model.
Apart from institutional funding, the proposal also explores community bonds that would enable citizens and non-resident Keralites to directly invest in the project. Such instruments, already used in renewable energy projects in several countries, typically offer coupon rates ranging between 7% and 9%.
‘Metro Man’ E Sreedharan had presented the proposal to Chief Minister V D Satheesan on May 29. The 473km corridor, connecting Thiruvananthapuram and Kannur in three-and-a-half hours, is projected to be completed within five years of receiving statutory clearances.
The proposal has already generated interest among expatriate Malayalis. Dr Prince Pallikinnel, founder chairman of the World Malayalee Federation, said overseas Keralites would be willing to invest in the ambitious project. “Malayalis across the world would be ready to invest in this prestigious rail project, provided it has a young leadership team backing it. Sreedharan has the credibility and vision to complete the project in record time. But we would also want a younger team to support him,” he told TNIE.
CROWDFUNDING
40% of the estimated Rs 60,000-crore project cost is envisaged to be met by crowdfunding
The remaining amount would come as equity participation from Centre and the Kerala government on a 51:49 ratio
