The much-delayed dedicated freight corridor project of the railways will begin soon with the Cabinet expected to clear Rs 17,700-crore loan from the Japan Bank for International Cooperation (JBIC) on Thursday. The proposal was part of the agenda of the Cabinet meeting last week, but it was deferred as railway minister Mamata Banerjee was not present.
The loan will be used by the railways to fund a 920-km stretch between Rewari and Vadodara on the western arm of the dedicated freight corridor. The western corridor, which will cover a distance of distance of 1,483 km of double line diesel track from JNPT to Dadri via Vadodara- Ahmedabad- Palanpur- Phulera- Rewari is expected to cost Rs 26,124 crore.
The loan, being negotiated in the form of overseas development assistance is likely to have an interest rate of 0.2% and will have to be paid back in 30 to 40 years. It will also have a 10-year moratorium.
Rail Bhawan officials said in return, railways will ensure that the main contractors for the stretch funded by JBIC are Japanese firms. Apart from this, 30% of the loan or about Rs 5,300 crore should be used for importing goods and services from Japan.
If the Cabinet approves the proposal, the railways will finally have some certainty on funding the ambitious project, which has been in the pipeline for over four years now. While the railways is trying to construct portions of the DFC on its own using the EPC method, it has managed to rope in the World Bank to finance some part of the eastern corridor. The World Bank has approved a loan of Rs 12,000 crore for the 730-km Mughalsarai-Khurja section on the eastern corridor.