 "We will place orders worth Rs 14,000 crore in FY17: Adesh Sharma")
Dedicated Freight Corridor Corporation (DFCC) is among a handful of railway projects where work has been fast-tracked significantly in the past two years. The company’s Managing Director Adesh Sharma discusses the status of the project with Sudheer Pal Singh. Edited excerpts:
What is the current status of the project?
DFCC is now on fast track. Things are moving now at a very high speed, compared to earlier years. We have placed contracts worth more than Rs 25,100 crore in the past one year, which is more than twice the value of contracts placed in the previous six years. Also, there has been a five-fold increase in the physical progress of the work. The work is progressing from Khurja to Sonnagar on Eastern DFC, and from Rewari to Palanpur and Vadodara to Vaitharna on Western DFC. We have placed 76 per cent of the contracts for civil works, 63 per cent of electrical contracts, and 63 per cent of signaling contracts. We will place orders worth Rs 14,000 crore in FY17.
The total expenditure by DFCC stood at Rs 8,600 crore last financial year, as compared to Rs 2,800 crore in the previous financial year (2014-15). Thus, there is a three-fold improvement in the financial progress of the project. The target is Rs 12,500 crore for the current financial year. Of this, Rs 3,500 crore will be spent on land acquisition and the balance Rs 9,000 crore will be spent on contractual payments. The project will be commissioned in phases between March 2018 and December 2019.
What will be the revenue model adopted for DFCC when the project is fully commissioned?
The entire revenue for the freight carried by DFCC will be collected by Indian Railways. The railways will pay us track access charges (TAC). These charges will have two components — a fixed component, which will take into account loan repayments and staff expenses, and a variable component for actual operation & maintenance (O&M) costs, including electrical charges. TAC will be defined based on the recommendations of a committee.
What would be the cost of operation of DFCC, compared with that of Indian Railways network?
Our O&M cost will be at least 40 per cent lower than Indian Railways. This is because the average speed of a train on DFCC would be 70-75 Kmph, three times the speed of a goods train on the railways system. Also, the carrying capacity of a DFCC train would be 13,000 tonne, as compared to 5,000 tonne being carried today. For a freight train on the DFCC system, the guaranteed delivery period between Delhi and Mumbai will be less than 24 hours, compared to two-three days taken by a goods train. We will be limiting the use of guards in trains by using telemetry systems at the end of trains.
Railways freight traffic has been hit recently due to core sector slowdown. How sure are you of capturing the freight volumes?
When DFCC is commissioned, 70 per cent of the goods traffic on railways system will get transferred to DFCC. Also, we will capture a lot of new traffic. DFCC will increase the railways modal share in transport, which has come down to 36 per cent from 86 per cent at the time of independence. We will be able to target automobiles and perishable goods traffic, which is very low today. A lot of industrial development is taking place on the Western corridor. We plan to have multi-modal logistic parks. So, much of the traffic will also come from private freight terminals for which a policy has been finalised.
DFC will also play a major role in decongestion. With every train of DFCC carrying 13,000 tonne of load, 1,300 trucks will go off the road.
How much of the land and the funding requirement for the project have been secured?
We have acquired 88.9 per cent of the total land required for the project. In the earlier alignment, there were problems, as large number of structures were requiring dismantling as it was passing through heavily built-up area in Khurja to Saharanpur section where the alignment had to be changed. That land acquisition will now be completed smoothly. There were some problems in acquiring land in two patches in Gujarat and Maharashtra. The issues have now been resolved and the land will be handed over to us by December, 2016. We have also been able to convince the state governments for cost sharing of ROBs, which has led to savings of Rs 2500 crore to Indian Railways and DFC.
What is the current status of the project?
DFCC is now on fast track. Things are moving now at a very high speed, compared to earlier years. We have placed contracts worth more than Rs 25,100 crore in the past one year, which is more than twice the value of contracts placed in the previous six years. Also, there has been a five-fold increase in the physical progress of the work. The work is progressing from Khurja to Sonnagar on Eastern DFC, and from Rewari to Palanpur and Vadodara to Vaitharna on Western DFC. We have placed 76 per cent of the contracts for civil works, 63 per cent of electrical contracts, and 63 per cent of signaling contracts. We will place orders worth Rs 14,000 crore in FY17.
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What is the progress on the expenditure front?
The total expenditure by DFCC stood at Rs 8,600 crore last financial year, as compared to Rs 2,800 crore in the previous financial year (2014-15). Thus, there is a three-fold improvement in the financial progress of the project. The target is Rs 12,500 crore for the current financial year. Of this, Rs 3,500 crore will be spent on land acquisition and the balance Rs 9,000 crore will be spent on contractual payments. The project will be commissioned in phases between March 2018 and December 2019.
What will be the revenue model adopted for DFCC when the project is fully commissioned?
The entire revenue for the freight carried by DFCC will be collected by Indian Railways. The railways will pay us track access charges (TAC). These charges will have two components — a fixed component, which will take into account loan repayments and staff expenses, and a variable component for actual operation & maintenance (O&M) costs, including electrical charges. TAC will be defined based on the recommendations of a committee.
What would be the cost of operation of DFCC, compared with that of Indian Railways network?
Our O&M cost will be at least 40 per cent lower than Indian Railways. This is because the average speed of a train on DFCC would be 70-75 Kmph, three times the speed of a goods train on the railways system. Also, the carrying capacity of a DFCC train would be 13,000 tonne, as compared to 5,000 tonne being carried today. For a freight train on the DFCC system, the guaranteed delivery period between Delhi and Mumbai will be less than 24 hours, compared to two-three days taken by a goods train. We will be limiting the use of guards in trains by using telemetry systems at the end of trains.
Railways freight traffic has been hit recently due to core sector slowdown. How sure are you of capturing the freight volumes?
When DFCC is commissioned, 70 per cent of the goods traffic on railways system will get transferred to DFCC. Also, we will capture a lot of new traffic. DFCC will increase the railways modal share in transport, which has come down to 36 per cent from 86 per cent at the time of independence. We will be able to target automobiles and perishable goods traffic, which is very low today. A lot of industrial development is taking place on the Western corridor. We plan to have multi-modal logistic parks. So, much of the traffic will also come from private freight terminals for which a policy has been finalised.
DFC will also play a major role in decongestion. With every train of DFCC carrying 13,000 tonne of load, 1,300 trucks will go off the road.
How much of the land and the funding requirement for the project have been secured?
We have acquired 88.9 per cent of the total land required for the project. In the earlier alignment, there were problems, as large number of structures were requiring dismantling as it was passing through heavily built-up area in Khurja to Saharanpur section where the alignment had to be changed. That land acquisition will now be completed smoothly. There were some problems in acquiring land in two patches in Gujarat and Maharashtra. The issues have now been resolved and the land will be handed over to us by December, 2016. We have also been able to convince the state governments for cost sharing of ROBs, which has led to savings of Rs 2500 crore to Indian Railways and DFC.