Dedicated Freight Corridor Corporation of India Ltd (DFCCIL), the special purpose vehicle formed to construct rail corridors exclusively for freight movement, has asked the railway ministry to come out with a suitable model to finance Sonnagar-Dankuni stretch of eastern corridor that connects Dankuni in West Bengal with Ludhiana in Punjab.

The need to formulate a new model is necessary as the World Bank and Japan International Cooperation Agency (JICA), the multilateral funding institutions giving loan for the ambitious project, don’t want to commit more money. The World Bank?which is financing the eastern corridor?has committed $3 billion, while JICA?the financier of western corridor from Jawaharlal Nehru Port Trust in Maharashtra to Dadri in Uttar Pradesh?has promised a loan of Rs 40,000 crore.

Railway ministry officials say the World Bank had committed the loan thinking that the eastern corridor will end at Sonnagar in Bihar, as envisaged by previous railway minister Lalu Prasad. However, incumbent Mamata Benerjee in 2009 extended the corridor to Dankuni in her home state West Bengal, increasing the requirement of fund.

?The World Bank is saying that this is the largest single project it is financing and hence it is not possible to commit more for the same project,? DFCCIL director (finance) R K Sinha told FE. ?We are talking to the ministry on the funding model that should be used to finance the Sonnagar-Dankuni stretch. As per our estimate, the basic cost of the stretch would be Rs 8,500 crore,? he added.

DFCCIL wants to take the industry’s opinion to find a viable funding model for the stretch that is to be constructed through PPP. ?The ministry is finalising the detailed terms of concession. I think in the next 4-6 weeks, we will start talking to the industry to see whether they will be interested in constructing the stretch,? Sinha said.

Sonnagar-Dankuni is the first stretch of dedicated freight corridors that is to be implemented in PPP mode. All other segments are to be implemented either by railways or DFCCIL and funded by either central government, World Bank or JICA.