Things may be finally falling in place for the railway ministry?s mammoth dedicated freight corridor (DFC), given the greater clarity on financing issues. Signalling this change, the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL), the special purpose vehicle entrusted with the project, recently invited expressions of interest for the construction of the Bhaupur (near Kanpur) to Mandrak (near Aligarh) segment on the eastern corridor.
This follows railway minister Lalu Prasad?s Budget promise to begin construction of the two arms of the project in 2008-09. The DFC, covering about 2,762 km, will stretch from Ludhiana to Sonenagar/Dankuni (aka the eastern corridor) and from Mumbai to Tughlakabad (western corridor). While the cost of the eastern corridor has been fixed at Rs 19,613 crore (only track), the western corridor will cost Rs 23,680 crore (track, electric locomotives and price changes).
Sources told FE that the contract should be awarded by September. According to the expression of interest invitation, the stretch will be constructed on an engineer-procure-construct basis and will be funded by the railways. The cost of the project has been estimated at around Rs 3,000 crore. With a high volume of freight transportation, the 300-km segment is one of the priority areas for the railways.
On the financial front, too, things seem to be looking up and several critical funding issues have become clearer. A ministry official pointed out, ?It is already clear that the eastern part of the corridor will be financed by the railways on its own. So we see no need to wait for a business plan before beginning work on the eastern corridor.?
There is greater clarity on other funding issues, too, say officials. The railway ministry?s talks with Japan for a loan finally seem to be bearing fruit. The Japanese Bank for International Cooperation (JBIC) has indicated its willingness to provide around Rs 14,000 crore for the 700-km segment from Rewari to Baroda on the western corridor.
The loan, however, would be finalised once a trial run of double-stack container trains on an electrified route?Chakarpur to Daitari (in Orissa)?is successful. Trial runs are already being conducted by the JBIC. ?The trial run is likely to be completed by the middle of the year, and the JBIC loan is likely to be finalised by the first quarter of 2009,? said KC Jena, chairman of the railway board, recently. JBIC has also sent a letter of comfort to the railways, Jena added.
To meet the shortfall in funds, the railway ministry has also begun talks with multilateral funding organisations. Sources said it has approached the World Bank and the Asian Development Bank to finance segments of the eastern corridor and parts of the western corridor.
The ministry hopes to raise around Rs 10,000 crore from the World Bank for the eastern corridor. The response from both organisations has been quite positive, sources added.
Meanwhile, to silence critics for its lack of a business plan, the railway ministry is in the process of appointing a consultant to work on one. So far, both the finance ministry and the Planning Commission have castigated the railways for the lack of a business plan, which they feel has delayed the start of construction.