Ministry likely to fund rail freight corridor

Concerned over the delay in release of Japanese loan for its Rs 28,000 crore dedicated rail freight corridor (DFC) project, the railway ministry is seriously considering the option of funding it on its own rather than relying on loan.

"A decision is soon expected to be taken by the ministry whether to wait for the Japanese government loan or fund the project by raising money from the market and using its own resources," a top government official said.

The ministry has been thinking of starting the project since 2005. However, with land yet to be acquired for laying lines and the Japanese agency Jica taking two years in conducting the feasibility study of the project, the ministry now does not want to further delay the project.

The project involves laying down of parallel tracks on the Golden Quadrilateral route covering the four metros, for segregating passenger and freight trains.

In the first phase, which would cost Rs 28,000 crore, the eastern corridor (Delhi-Kolkata) and the western corridor (Delhi-Mumbai) lines are to be laid.

Railway Minister Lalu Prasad had announced that the project would be funded by the ministry itself. For this purpose, the ministry had also set up a special purpose vehicle, Dedicated Freight Corridor India Ltd (DFCIL).

However, as a safeguard measure talks had taken place with the Japanese government in 2005 for a loan, which could be required at a later stage.

While the Japan government took two years to complete its feasibility study, it is now asking the railway ministry to electrify the western corridor.

"If this is done, there would be a delay of at least another three years," said the official.

The official said the possibility of the railway ministry funding the project on its own is gaining strength.

"With the railway ministry having a surplus of more than Rs 20,000 crore, the ministry can leverage its ability to raise money from the market and go on its own," the official said.

Of the Rs 28,000 crore, around Rs 9,000 crore is to be raised by the ministry as equity, while remaining amount is to be raised through debt.

A part of this debt is to come through the Japanese loan, as per the present arrangement.

The Cabinet Committee on Economic Affairs (CCEA) had given in-principle approval to the project in November last year. The total distance of the two corridors is 2,763 km. The eastern corridor would be 1,280 km, while the western corridor would be 1,483 km.