Financially-overburdened Indian Railways (IR) is set to face hefty bills from the Dedicated Freight Corridor Corporation of India (DFCCIL) starting 2020-21 as the transporter has to pay the latter track access charges (TACs).
Financially-overburdened Indian Railways (IR) is set to face hefty bills from the Dedicated Freight Corridor Corporation of India (DFCCIL) starting 2020-21 as the transporter has to pay the latter track access charges (TACs). DFCCIL — a special purpose vehicle of the railways which has been entrusted with the job to develop dedicated freight corridors (DFCs) in the country — plans to completely operationalise both the Eastern and the Western DFCs by March 31, 2020. TACs include part of DFCCIL’s fixed costs, variables (fuel charges, staff cost) and finance (depreciation, cost of capital and interest) costs. “About `9,900 crore will be the payment IR will make to DDFCIL in the first year.
The charges thereon will vary according to the fuel bill plus some marginal cost of maintenance. We have done the forecast for 30 years. The increase in bill will be 1-2% every year apart from fuel charges which cannot be predicted,” said a source. As per the business plan prepared by consultants, the cost to IR is likely to escalate to around `11,559 crore in 2021-22 and will go up to `14,500 crore by 2025-26 (see table). Part of these funds will be utilised by DFCCIL to pay back the loans availed to develop the two DFCs. While the World Bank-funded Eastern DFC will run from Ludhiana to Dankuni having a length of 1,856 km, the 1,504-km Western DFC will run between Dadri and Jawaharlal Nehru Port, and has been funded by the Japan International Cooperation Agency (JICA).
The repayment to the World Bank is set to start next year while the repayment schedule for JICA begins in 2026. While DFCCIL will operate the DFCs, railways will have to pay projected TACs every year, whether it utilizes the paths or not. The total potential paths wherein IR can use DFCs instead of its own tracks on the two DFCs is 120, which will be available to IR as well as other operators such as Container Corporation of India and private freight terminal (PFT) operators. The entire cost of operations will be divided among these paths. In case IR is the only user, it will have to pay the entire amount. However, if there are other operators, they will pay electricity charges and variable cost of the path and a proportionate part of the fixed cost, and that amount will be deducted from IR’s burden.
According to the source, there have been inquiries from PFTs, private freight operators, ports and auto manufacturer Maruti Suzuki India to use the DFCs. Roughly, if 100 million tonne of freight a year is ferried on DFCs, it will generate `10,000 crore of revenue. The source said if IR or other operators are able to utilise all the paths, enough revenue will be generated to make good the applicable TAC. However, this will have to be in addition to the existing freight IR carries on its current network given that the transporter’s operational cost will not go down much in case it merely transfers the existing freight on its network to the DFCs. The silver lining for the transporter is that the per net tonne km cost on DFC will be 40-50 paise, depending on the train load, compared with around 100 paise on the existing routes. The two DFCs will have a capacity to run 400 million tonne of additional traffic a year to start with in 2021, which can potentially translate to `40,000 crore of revenue.