Railways zeros in on three PPP models

Dedicated Freight Corridor Corporation of India Ltd (DFCCIL), the special purpose vehicle (SPV) formed to construct rail corridors exclusively for freight movement, has shortlisted three models of public-private partnership (PPP) for the 550-km Dankuni-Sonnagar stretch on the eastern corridor.

According to DFCCIL managing director R K Gupta, the models are design, build, finance, maintain, operate and transfer; design, build, finance, operate and transfer; and design, build, finance and maintain. Gupta said the railway ministry was yet to approve the options.

Once the ministry approves the options, DFCCIL would work out the modalities of the tender and start working on the documentation of the details of the plan. The bidding is expected to start by March 2012, while the construction is expected to be completed by 2016. The eastern freight corridor would be executed in a phased manner through a mix of World Bank funding, internal generation of the railways and PPP.

The World Bank will fund $2.7 billion in three tranches: $975 million for Khurja-Kanpur (343 km), $1.05 billion for Kanpur-Mughalsarai (390 km), $700 million for Ludhiana-Khurja (397 km). The bank has already approved the first tranche for developing the Khurja-Kanpur stretch.

The second and third tranches will be sanctioned once DFCCIL complies with ‘triggers’ like a definite progress in the ongoing project and a certain percentage of land acquisition. The 125-km Mughalsarai-Sonnagar stretch will be funded by the railway ministry, while the Sonnagar-Dankuni section will be financed through PPP.

The stretch between Sonnagar and Dankuni was added after Mamata Banerjee became the railway minister in 2009, as she intended to include her home state, West Bengal, in the corridor.

Besides, logistics parks would come up at Kanpur in Uttar Pradesh and Ludhiana in Punjab. These parks are proposed to be developed on a PPP mode by creating a sub-SPV. DFCCIL proposes to provide rail connectivity to such parks, and private players would be asked to develop and provide infrastructure as a common user facility.

According to a study done by RITES, the projected traffic on the freight corridor in 2016-17 is 75.60 million tonnes, which is likely to increase by 20 per cent by 2021-22 to 91.33 mt.