The World Bank will give nearly $4 billion loan to India for the proposed Dedicated Freight Corridor project. A team of officials, led by lead transport specialist Ben L J Eijbergen, is visiting New Delhi next week to negotiate the terms of loan with the government. The team will also meet senior officials from finance and railway ministry.
The money will be used for developing eastern freight corridor between Punjab and West Bengal, which will triple the freight loading at the stretch. Earlier, Asian Development Bank (ADB) and The World Bank were to finance the project together but later ADB refused to give any new loan for railway projects. Dedicated Freight Corridor Corporation (DFCC), the special purpose vehicle formed to supervise construction of the corridor, had estimated ADB would agree to a loan of $1.5 billion.
?The World Bank has agreed to meet the entire requirement for eastern corridor. But the terms are yet to be negotiated,? a senior government official told FE requesting anonymity.
Under the earlier dispensation, the bank was to give a loan of $2.4 billion, but with ADB withdrawing from the project the bank will account for almost the entire debt required for eastern corridor. The corridor is pegged to cost R40,665 crore, two-third of which will be borrowings from multilateral institutions and banks and the balance will be in the form of equity from railways. Agreement with the World Bank is expected to relieve financially-constrained railways to a large extent.
Railways is working to commission two dedicated corridors for freight movement, called western and eastern corridors, by March 2017. The western corridor, which is slated to cost R40,795 crore, connects Jawaharlal Nehru Port Trust in Maharashtra to Dadri in Uttar Pradesh and eastern corridor links Dankuni in West Bengal with Ludhiana in Punjab. The western corridor will be debt-funded by Japan International Cooperation Agency.
The two corridors together will increase freight loading capacity on these stretches by nearly three fold from 92 million tonne (MT) to 253 MT by March 2017.