The government is working on a Rs 600 crore bailout package for the loss making Konkan Railway Corporation (KRC).
The bailout package will help KRC tide over the payment crisis it faces for the bonds raised for the project. The bonds involve an outgo of about Rs 700 crore this fiscal.
"The ministry of finance is favourably inclined to our proposal for an over Rs 600 crore bailout. With the government keen to step up spending in key infrastructure areas, helping Konkan Railway stand on its feet may be possible with a one-time Central support," a senior Railway official said.
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Railways and finance ministry officials are giving a final shape to the package and it is expected to be put up before the Cabinet soon, the official said.
The 760 km Konkan Railway, a joint venture between the Railways and the state governments of Goa, Maharashtra, Karnataka and Kerala incurs a loss of nearly Rs one crore every day. Its income at about Rs 220 crore per year is just about sufficient to meet its operating costs.
Konkan Railway officials, however, say that there should be no need for a bailout package if the Railways honour their commitment of transferring more traffic from the southern region.
"Every goods train on the line would fetch the KRC an additional Rs 22 lakh, and if the Railways can move four to five freight trains on the line each day, our cash flows would increase substantially," a Konkan Railway official noted.
The Railways had originally justified the project based on greater flow of traffic on the Konkan route, which reduces the distance between Kerala and central India.
Moving more traffic on the route, instead of taking it through the circuitous Southern Railway route as is the practice now, would not only lead to cost and time savings for users, but also make the project viable, the official said.
"The Konkan Railway route is, at present, grossly under-utilised with just one or two goods trains and nine pairs of passenger trains passing on it per day and the break even point can be achieved with an additional four or five trains," he said.
However, the Railways, on their part, say they are in no position to divert traffic on the line as they are not generating sufficient business themselves and the economic slowdown coupled with competition from the roads sector has upset their calculations.