The eastern arm (Ludhiana to Dankuni) of the Indian Railways’ ambitious Dedicated Freight Corridor project is expected to face funding hurdles.
Of the 1,839-km eastern corridor, 1,130 km is funded by the World Bank. The funding is capped at $2.725 billion (about Rs 16,350 crore, at current exchange rates).
For construction and civil works related to the freight corridor, costs stand at about Rs 10/km. Senior officials of the Dedicated Freight Corridor Corporation (DFCC) said following the tranche for the second phase, the third and last phase would have inadequate funds. “We might have to explore the option of market borrowing. We will just have about $0.65 billion left for the third phase,” said a senior official. The amount would be sufficient to complete the civil works; additional funds would be required for signalling and electrification.
In the eastern, corridor the remaining stretch is to be completed through funding by the Ministry of Railways and the public-private partnership (PPP) route. While the ministry is expected to provide about Rs 4,000 crore for the Mughalsarai-Son Nagar stretch, the Son Nagar-Dankuni section is to be funded through the PPP route.
Ministry sources said the financial model or the revenue structure hadn’t been decided and, therefore, no bids had been invited for the PPP section. Though the deadline to complete the entire eastern corridor is 2018, it is unlikely the project would be completed by then. If Dedicated Freight Corridor Corporation has to adhere to the deadline, it has to award all the projects for civil works by the end of 2014. Each phase takes about four years for completion.
“We expect to award contracts of about Rs 14,000 crore by the end of this year for the remaining section of phase-I on the western corridor and phase-II of the eastern corridor,” said Rakesh Gupta, managing director, Dedicated Freight Corridor Corporation.
So far, two contracts have been awarded — one each for the eastern and western corridors. On the eastern corridor, a 343-km stretch from Ludhiana to Mughalsarai was awarded to Tata-Aldesa. The civil contract is worth Rs 3,300 crore and the section accounts for 18.5 per cent of the entire eastern corridor.
In the western corridor, the first contract awarded accounts for 43 per cent of the entire corridor. This corridor is completely funded by Japan International Cooperation Agency. The first contract was awarded to L&T and Sojitz for a 640-Km stretch between Rewari and Vadodara. With the next contract award, construction on 62 per cent of the corridor would be underway.
DFCC has already secured environment clearances.
And, about 93 per cent of the entire land has been acquired. Going ahead, this could make the PPP route smoother and keep other works insulated from delays. The delay being seen in the eastern corridor could prove to be a costly affair for Indian Railways, as the Ludhiana-Khurja section is the starting point of the eastern corridor.
According to Dedicated Freight Corridor Corporation’s projections, this corridor is expected to account for the movement of about 54 million tonnes of powerhouse coal each year by 2017. Also, the corridor is crucial for providing coal from the eastern coal fields to power plants in Uttar Pradesh, Delhi, Haryana, Punjab and parts of Rajasthan.
The delays would also affect the railways’ ambitious plan to increase the speed of passenger trains to up to 200 km/hour.
