The commissioning of the Dedicated Freight Corridor is going to start in phases beginning March 2018. Adesh Sharma, the MD of the Dedicated Freight Corridor Corporation of India, in an interview with Bilal Abdi, explains how this mega infrastructure project will decongest the railway network for freight transport. It will also usher in a technological revolution of sorts in laying of new tracks and making available higher capacity locos and double stack containers. Excerpts:
What is the cost of both the corridors (east and west) and how are funds being managed?
Of the R81,459 crore total cost for both the corridors, R73,392 is the cost of construction and the remaining is the cost of land. The land cost is being borne by the Indian Railways and the land acquired will be in the name of railways.
How much land has been acquired?
The total land requirement for both the corridors is 11,550 hectares, and so far we have acquired 83% of it. Of the R73,392 crore, we have got JICA funding of R38,722 crore on the western corridor in the form of a soft loan, the interest is 0.1% and with hedging the cost to us comes to 7%. The eastern corridor is being funded by the World Bank; R13,625 crore has been provided in three phases.
And how much is the actual disbursal of money?
The total expenditure so far is R5,062 crore, including land. The work has begun on Khurja-Kanpur (eastern corridor) and Rewari-Palanpur (western corridor). It is also progressing on the Kanpur-Mughalsarai (east) and Vadodara-Vaitarna (west) sections.
What about the equity component?
The debt-equity ratio is 3:1. Earlier we kept a 2:1 ratio but we decided we need to take more loans. The equity support is given by the railways.
The land for DFC also includes railways’ existing land…
The DFC is being built parallel to the existing railway lines, but in congested areas and cities we have diverted the rail line because it is very difficult to acquire land in such places. Of the total land (11,550 hectares), 9,569 hectares or 83% has already been acquired. The original proposal was to go up to Son Nagar only, i.e. Ludhiana-Son Nagar (east side) and Dadri-JNPT (west side). Now Son Nagar to Dankuni extension will be done on PPP basis, the length of which is 525 km. The 1,500-km Dadri-JNPT is part of the western corridor and not an extension.
The commissioning time for both eastern and western corridors is December 2019. But we will start commissioning in phases, the first will be in March 2018, which will be Khurja-Kanpur and Rewari-Palanpur sections.
What will be the coverage in terms of area by these corridors?
If we see the traffic pattern, we have got six corridors which join four major cities, called the golden quadrilateral, and they are diagonals. This is 16% of the length of the Indian Railways and it carries 58% of the total freight traffic. All six routes are heavily congested. Since the land capacity utilisation is 130%, there is no possibility of adding new trains on these lines. We will take up all these six corridors, but for now we have taken only two corridors. Out of the four corridors, two will be sanctioned in some time—east-west connecting Kolkata to Mumbai; east coast connecting Kolkata to Vijayawada. South-west (Chennai-Goa) and south-north (Chennai-Delhi) are in the pipeline. The total cost of the four corridors will be $65 billion, and the total length will be 6,200 km.
Are you satisfied with the progress?
In the last one year, progress has been boosted 10-fold in western and three-fold in eastern corridor. We have awarded 66% of contracts on the eastern and 64% on the western corridor. Our contractors are global agencies and they are selected and monitored by JICA and World Bank. Most joint ventures on the western corridors are between Japan as a lead partner and any other player. Anybody can participate in the eastern corridor. The progress of execution will see a quantum jump after April 2016, as 90% of procurement would be completed.
Are you looking for a change in the funding pattern?
We will resort to multilateral funding. World Bank and JICA have shown interest. If all the corridors are completed, railways’ share in goods transport will rise to 50% from the current 36%.
Will the new land acquisition Act affect costs?
Since for the current corridors we have already acquired 83% of the land, for the rest 17% it will not affect the cost so much. We have started paying compensation according to the new land Act since January 2015. The Railway Board is examining how to comply with the employment (for local people) provisions is the new Act. There are more than 3 lakh affected persons and, obviously, we cannot give employment to everyone, but we are working on it. We could give a choice to the people between employment, lump-sum payment or annuity, in addition to the compensation being given. We have taken into account all these factors when arriving at the estimate of $65 billion. We depend on the evaluation done by the state government for the market price of land. There are about 1,500 court cases and about 7,000 arbitration cases, of which 3,536 arbitration cases have been resolved and 850 court cases are pending. Land acquisition will not be a constraint.
What is the value of tenders awarded till now?
We have awarded tenders worth R11,587 crore on the eastern corridor and R19,225 crore on the western corridor, making it a total of R30,812 crore.