Railways sticks to its funding plan for dedicated freight corridor

Written by Surabhi Rastogi | Surabhi | New Delhi, Oct 29 | Updated: Oct 30 2007, 04:27am hrs
Rail Bhawan has stuck to its gun on the funding options for the stalled dedicated freight corridor project. Despite objections from the finance ministry and the Planning Commission, the railway ministry is planning to take approval form the government for its funding plan.

The ministrys cabinet note has asked for a final clearance for the financing plan for the project for Rs 28,000 crore as finalised by RITES.

The ministrys note says about Rs 4,000 crore will be in the form of equity and the rest will be debt. It has however still not finalised how the debt component, amounting to about Rs 24,000 crore will be funded.

We have kept our options open at present. We are in talks with the Japan Bank of International Cooperation, but if that fails, we will use a part of our internal generation and go to the market, said a ministry source.

While the proposal is likely to be taken up by the Cabinet Committee on Economic Affairs (CCEA) this week, the verdict on it remains uncertain. The finance ministry and the Planning Commission have both asked the Railways to come up with more concrete funding plans for the project.

They also want to know the exact amount that railways plans to get through public private partnership. They have said if the railways were not able to give an exact break up of funding of the project, it would be difficult for them to ditto it.

However railway ministry is of the view that it is still too soon to finalise this aspect. Let us get Cabinet clearance once and then we will be in a better position to decide all this, the official said. The special purpose vehicle for the projectthe Dedicated Freight Corridor Corporation of India Ltdwill also have greater operational flexibility, once the project gets clearance, he added.