Rail freight corridor cost doubles in 5 yrs to Rs 73k cr

The work toward ambitious dedicated freight corridor (DFC) of Indian Railways might not have covered much ground in the last five years but the total project cost has escalated more than twice during this time. Railways planned to build the corridor, which is pegged to ease freight movement and contribute to the industrial development of the country at Rs 28,000 crore.

However, the cost has now increased to nearly Rs 73,000 crore, according to officials of Dedicated Freight Corridor of India (DFCCIL). DFCCIL is a special purpose vehicle (SPV) created by railways to develop the corridor by financial year 2016-17. ?The total cost of the project, excluding cost of land, is estimated at Rs 68,000 crore. The land would cost another Rs 5,000 crore,? a senior official of DFCCIL said.

?The initial cost estimate generally increases with time as the picture becomes clearer on the requirements to implement the project. The same has happened in case of dedicated freight corridor. Due to escalation in input cost, addition of new segments and time overruns the total cost of the project has increased,? a senior railway official told FE.

Even as DFCCIL expects the cost to rise to Rs 73,000 crore, the Planning Commission thinks the project could consume Rs 1 lakh crore by the time it is complete. The commission has asked railways to prepare a new funding plan for the project as the increased costs would create pressure on railway finances and DFCCIL may require to borrow more. The project is to be developed through loans from Japan International Cooperation Agency (JICA) and World Bank, and equity from Indian Railways in the ratio of 2:1.

The DFC was conceived in year 2005 and railway subsidiary RITES had come out with cost estimation of Rs 28,000 crore in year 2007. The dedicated freight corridor has six segments.

DFCCIL has secured most of the loan till the second phase of western corridor, which traverses from Jawaharlal Nehru Port Trust in Maharashtra to Dadri in Uttar Pradesh. The process is on to get funds for eastern corridor that goes from Bihar to Punjab. Land acquisition is in progress.

The project was planned with two segments?western and eastern. Later four more segments were added. These are East West Corridor (Kolkata-Mumbai), North South Corridor (Delhi-Chennai), East Coast Corridor (Kharagpur-Vijayawada) and Southern Corridor (Goa-Chennai).