Bhubaneswar, Nov. 4: The ministry of railways today signed an MoU with the Odisha government for setting up a joint venture company raising hopes of connecting seven districts of the state that are not connected by trains.

The seven districts are Malkangiri, Nabarangpur, Kandhamal, Boudh, Nayagarh, Deogarh and Kendrapara. While the first six districts are hilly and tribal-dominated, Kendrapara is a coastal district.

Odisha is the first state to partner with the railway ministry to form a joint venture with shareholding agreement to take up railway projects. The new company will take up construction of priority railway projects in the state. While the state government will have 51 per cent equity in the company, the rail ministry will own the remaining 49 per cent share.

The authorised capital of the company will be Rs 200 crore and paid up capital Rs 100 crore, said a senior official of the state transport department.

Odisha commerce and transport minister Ramesh Chandra Majhi, who was present at the MoU-signing ceremony in New Delhi, said the construction of priority rail projects would start shortly after the company came into being.

Nabarangpur MP Balabhadra Majhi, who happens to be a former railway official, was excited that the railways would connect his district. He hoped that the Jeypore-Nabarangpur rail project would be become a reality within five or seven years.

Railway minister Suresh Prabhu said both Odisha and the railways would benefit from the move. "We hope to get more freight," he said.

Today's MoU will lead to the formation of a special purpose vehicle that will take up multiple railway projects in the state, something that has never happened in the past.

On August 20, the state government had inked an MoU with the railway ministry to complete the long-pending Khurda-Balangir railway line. The state government is bearing 50 per cent of the construction cost of the 177km line. It will also provide required land for this project free of cost.

With the execution of the MoU, the long-pending Khurda-Balangir rail line project has made rapid progress. Land acquisition up to 93km has been completed and tender has been floated for starting construction from Balangir end.

The project is targeted to be completed by December, 2021. The railway ministry has provided Rs 195 crore for the project in its budget this year.

The new entity to be born out of today's MoU will be an umbrella company to take up construction of other railway projects, especially in the seven districts.

Chief minister Naveen Patnaik had earlier urged the railway ministry to take up the Jeypore-Nabarangpur and Malkangiri railway lines on a priority basis. The state government had offered to contribute 50 per cent of the construction cost of the first project and 25 per cent of the second. It had also committed to provide land free of cost. If these two projects are taken up, Malkangiri and Nabarangpur, both affected by Maoist menace, will have railway links.

The state government has also proposed to the railway ministry to take up the Berhampur-Phulbani-Sambalpur railway project for which survey has been sanctioned. If this project comes through, it will connect Kandhamal district by trains.