Tag Archives: Japan International Cooperation Agency (JICA)

Indian Railways ‘mechanism’ to soon fix passenger fare rates

Indian Railways is planning to set up an independent institutional mechanism for deciding passenger fares and freight tariff based on efficiency, says Railway Minister Suresh Prabhu. He added that Railways is eyeing to save Rs 5,000 cr elsewhere.

Indian Railways “…will have an institutional mechanism which will take into account the efficiency to decide passenger fare and freight rate,” Railway Minister Suresh Prabhu said here today.

Asked whether it will be called Rail Tariff Authority, Prabhu said, “Nomenclature has not been decided yet but it will be a new mechanism altogether in Indian Railways.”

He further said that there will be a new law enacted by Parliament for the purpose.

“We will consult with Opposition on this and we will create a new law,” Suresh Prabhu said.

On energy efficiency, the Minister said Indian Railways is taking initiatives to save Rs 5,000 crore on energy bill in the next three years.

“Energy bill is the second biggest challenge for Indian Railways. We are taking various measures to reduce energy bill like going for solar power, wind energy and other energy conservation measures,” he said.

Currently, Indian Railways spend about Rs 22,000 crore on diesel and about Rs 13,000 crore on electricity.

On bullet train project, he said the JICA report on Mumbai-Ahmedabad high speed rail corridor project is being evaluated by the government to decide the future course of action on India’s first bullet train.

“The Japan International Cooperation Agency (JICA) has done a feasibility study on Mumbai-Ahmedabad high speed rail corridor. The government is evaluating it and accordingly a decision will be taken,” he said.

Besides Indian Railways, Finance Ministry, MEA and Niti Ayog are evaluating the report, he said, adding that such a project of this magnitude is happening for first time in India.

India’s maiden bullet train corridor between Mumbai and Ahmedabad will cost nearly Rs 1 lakh crore and the first train can run in 2024 if work begins in 2017, according to a final feasibility report on the project prepared by the JICA.

JICA in its report submitted to the Railway Ministy today envisages a reduction in the travel time on the 505-km long corridor between the two western cities to two hours from the existing over seven hours.

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Posted by on November 5, 2015 in Uncategorized


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Captive power plants: Lessons for Indian Rlys from East Japan

Guess what? The $23-billion East Railway Japan Company (JR East), which runs the Shinkansen or high speed rail network and metropolitan and regional rail services in Japan, meets most of its electricity requirement through self generation, Takeshi Tsuyoshi, General Manager, International Department, JR East, told BusinessLine.

JR East, which provides services in the eastern part of Japan, including the Tokyo Metropolitan Area, supplies 56 per cent of its electricity requirement from its own stable, with the remaining being purchased from outside. Also, in the Tokyo Metropolitan Area, the entire electricity used by JR East is self-produced.

This strategy has important lessons for Indian Railways, which faces high fuel cost and has been trying for long to set up captive power plants.

JR East revenue

JR East gets 67 per cent revenue from transportation services, with the remaining coming from non-rail businesses such as shopping centres, offices, hotels, restaurants offices, fitness clubs and even kindergartens in the stations.

From the transportation revenue, JR East gets 30 per cent from the high speed network, 66 per cent from the conventional lines in Tokyo Metropolitan area and four per cent from other conventional lines.

JR East makes about 15 per cent profits from in its railway and non railway business each. While the company has not been getting any subsidy from local and central government since 1987, when its was privatised, Tsuyoshi shared that prior to 1987, the government provided funds for building the infrastructure while these companies invested in the rolling stock such as trains.

High speed trains

For the expansion lines after privatisation, JR East has been ploughing back its profits from the transport operations to the new areas. “Not all sections are profitable. Some sections (more crowded ones) are profitable, which the newer ones take time to generate profits,” Tsuyoshi, who was visiting India to participate in a CII Rail Equipment conference, said.

Tsuyoshi also shared that not all high speed trains can run on the entire 7,458 km of JR East network. Of the 7,458 km of network, 1,470 km is Shinkansen or high speed network. However, there are some high speed trains which can run on both the HSR and conventional tracks.

Partnering with India

Japan has been pitching its high speed railway technology to India based on the fact that it is the “safest high speed railway system in the world and has recorded zero fatalities.” Japan International Cooperation Agency with India has completed the feasibility study for the Mumbai-Ahmedabad high speed section in July this year.

For high speed trains, from starting land acquisition to commercial run, the process takes about 15 years, said Tsuyoshi. JR East has offered to transfer technology for construction, operations and management for high speed rail systems.

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Posted by on October 26, 2015 in Uncategorized


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Easier JICA norms allow local firms win DFC projects

In a possible boost for the Make in India campaign and for the speedy construction of the Western Dedicated Freight Corridor (WDFC), Japanese authorities have agreed to relax the restrictive JICA loan terms such that Indian firms too can bid for the WDFC projects, without being in a consortium or in a joint venture with Japanese entities.

Currently, the fully tied-up Japanese overseas development assistance (ODA) to WDFC, of Rs 38,722 crore, is subject to the STEP (special terms of economic partnership) condition — projects can be awarded only to Japanese firms as principal contractors or JVs or consortia in which they have at least a 50% share of the work.

This has been a dampener for Indian companies even as the Japanese participation in the WFDC projects has remained dismal and restricted to a handful of firms. Players like Sojitz, Mitsui and Marubeni have been reluctant to put in bids for civil work contracts after qualifying, forcing India to take up the matter strongly with Tokyo.

Official sources told FE that in a recent round of talks in New Delhi that followed visits of some Indian officials to Tokyo, the Japanese side has said the STEP loan — the third and final tranche of which was tied up on June 30 — won’t be disrupted for the reason that the contracts are given to Indian firms or to consortia where they are the lead partners. Domestic companies like L&T, Tata, GMR, JSPL and others would benefit from the proposed easing of the JICA loan conditions.

A proposal to reduce the condition that the share of goods and services to be procured from the Japanese firms be reduced from “30% or more” to “25% or less”, was also taken up by the Indian side in the recent talks anchored by the finance ministry, sources said, adding that there was no definite commitment from the Japanese negotiators.

The JICA loan carries a nominal interest rate of 0.1% (there is an additional cost of 7% for hedging the currency risk which the Indian Railways as equity investor will pay to the finance ministry after a 10-year moratorium). It is the principle resource for the 1,502-km corridor, connecting Dadri in Uttar Pradesh to Mumbai, traversing four states — Haryana, Rajasthan, Gujarat and Maharashtra. While the total construction cost of WDFC is estimated to be around Rs 46,200 crore, a few thousand crores are being spent additionally for land acquisition. The Indian Railways is the equity investor in the project with a debt-equity ratio of 3:1 (the debt component was originally conceived to be less but was later enhanced).

While the recent talks with Japan also saw India insisting on a time-bound technology transfer to Indian firms, sources said such transfers have seamlessly been taking place in most of the contractor JVs. They added that even the norm of mandatory sourcing of 30% of materials from Japan was not much of a hassle as mostly components not manufactured in India are being imported.

The WDFC, along with the 1,840-km eastern dedicated freight corridor (EDFC) and four other corridors being planned, are expected to cut congestion in the golden quadrilateral rail line that carries 58% of the country’s freight traffic at present despite its length being just 16% of the India’s total rail network. The freight corridors on which the Delhi Mumbai Industrial Corridor would piggyback, are expected to help the railways regain its shrinking share in freight transport (36% at present) and bring huge economic gains by cutting costs of industries.

The WDFC and EDFC will be commissioned in phases, starting June 2018. These corridors, which will be well-connected with ports, will be fully commissioned by December 2019.

* Under STEP condition, projects can be awarded only to Japanese firms as JVs or consortia
* Japanese participation in WFDC, however, has remained dismal, limited to a few firms
* L&T, Tata, GMR, JSPL and others will benefit from easier STEP loan terms


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Posted by on August 3, 2015 in Uncategorized


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‘Mumbai-Ahmedabad bullet train to cost Rs 90,000 cr’

Prime Minister Narendra Modi’s pet project, a high-speed train network connecting India’s major cities, could burn a big hole in the government’s pocket.

According to an interim feasibility report submitted by the Japanese International Cooperation Agency (JICA), the Mumbai-Ahmedabad high-speed train corridor will cost at least Rs 90,000 crore, 43 per cent more than estimated by a consortium of RITES, Italferr and Systra in 2010.

France’s state-owned railway company SNCF had in April 2014 said the internal rate of return of the project would be 2.5 per cent over its life. SNCF operates France’s railway high-speed train network TGV.

“The JICA report, too, stated the IRR (internal rate of return) for the project would be three per cent,” said a railway ministry official. Given such a low return, it may be tough to find domestic investors for the project.

“The cost of the project is Rs 70,000 crore at present. But the cost at the end of seven years (the time it will take to complete the project), including interest, has been estimated at Rs 90,000 crore,” the official said.

With 100 per cent foreign direct investment (FDI) allowed in projects, the railways are open to offering high-speed train corridors to global players. Sources said foreign investors were stressing on buying equipment from manufacturers based in their countries. “This will limit our choices,” the official pointed out.

Last October, the French Court of Auditors questioned the TGV’s contribution to society. The auditors concluded emphasis on high-speed lines had resulted in the detriment of France’s conventional rail network.

Officials said the cost of building high-speed tracks was too high for the railways to bear. The capital budget of the railways is about Rs 1,00,000 crore in 2015-16, but the government could face opposition in financing the project.

“If it is financed entirely by the railways, states that do not benefit may oppose the project,” the railway official said. States through which high-speed trains pass might have to be persuaded to invest, he added.

High-speed trains are not a new concept for the railways. “Various feasibility studies has been conducted in the last 25 years. But the cost of the projects led the railways to drop plans,” another railway official said.

“When the railways do not have money to meet capital expenditure, we must consider the economic benefits of such courageous projects”, he added.

The JICA report said the economic rate of return, which reflects the increases in income as well as the full costs, for the Mumbai-Ahmedabad project was 11.9 per cent.

“IRR is not the right measure for a high-speed train or metro rail,” said Arvind Mahajan, partner and head of infrastructure and government services at KPMG. Productivity gains, the environmental impact, and technology transfer must be considered too, he added.

JICA estimated the cost per km for the Mumbai-Ahmedabad line would be over Rs 168 crore. Railway officials said it would cost much less to upgrade existing tracks for trains running at over 160 km an hour.

In 2010, the last full-term report by RITES on the Mumbai-Ahmedabad high-speed track estimated the cost at Rs 63,000 crore, or over Rs 100 crore per km.

The National Democratic Alliance government has a vision of a high-speed train network alongside the Golden Quadrilateral, highways connecting Delhi, Kolkata, Chennai and Mumbai.

Business standard

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Posted by on July 27, 2015 in Uncategorized


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BULLET TRAIN – 2 hrs to Ahd, ticket to cost 1.5 times Rajdhani first AC fare

The proposed Mumbai Ahmedabad high-speed corridor is estimated to cost Rs 98,805 crore and the one-way fare will work out to about Rs 2,800, about one-anda-half times the cost of a first-class ticket of Rajdhani Express on the same route–Rs 1,920.

According to the final feasibility report submitted to railways by the Japan International Cooperation Agency (Jica), bullet trains on the 505-km route will achieve a maximum speed of 350kmph, cutting travel time to 2 hours from more than seven hours it takes now.

The bullet train is a pet project of PM Narendra Modi. If work begins on the project by 2017, the corridor can be completed in 2023 and trains can be run in 2024. The railways will now examine Jica’s report and decide on the course of action. Acabinet note seeking approval for the project is likely to be prepared next month, a railway official said.

Jica has suggested that the line be built on the internationally accepted “standard gauge“, though some sections of the railways want it to be “broad gauge,“ on which most of India’s main-line trains run.The report states that high-speed trains of 300kmph and above run on standard gauge world over. The Japan government has offered low-interest funds for the project, an official said. But the offer comes with the rider that 30% of the rolling stock be sourced from Japanese firms. SNCF of France has already carried out a separate feasibility study of the route and submitted the business model to the ministry .


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Posted by on July 22, 2015 in Uncategorized


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JICA ready with report on high-speed corridor

The Japan International Cooperation Agency (JICA) is likely to submit its final project report on the Mumbai-Ahmedabad high-speed corridor to Railways Minister Suresh Prabhu on July 17. The report estimates that India’s first high-speed corridor will cost Rs 988,050 million.

Japanese ambassador to India Takeshi Yagi is expected to lead the official JICA delegation for submission of the important technical report that indicates the way forward on executing PM Narendra Modi’s pet project. The corridor will cover the 505km distance between Ahmedabad and Mumbai and is expected to reduce the train travel time between the cities to two hours from the existing seven-and-a-half hours. The corridor is expected to enable trains to run at a top speed of 350 kmph.

Following the report’s submission, Prabhu is expected to move a note seeking Cabinet approval for the project. He is also likely to provide an outline of the project feasibility and timelines during the upcoming Monsoon Session of Parliament beginning July 21.

From the initial estimated cost of Rs 650,000 million, the JICA has in its final report indicated a substantial cost escalation by factoring price escalation and interest during construction. Basic capital cost has been projected at Rs 700,129 million.

The Japan government is understood to have offered a soft-but-tied loan to build the corridor on the condition that India would source at least 30% of the rolling stock from Japanese firms.

The Japanese agency has suggested that the line be constructed on the internationally accepted “standard gauge”, as against certain opinions in the Indian establishment that the ‘broad gauge’ option be considered.

As the JICA’s final report points out, high-speeds running over 300 kmph are run on the Standard Gauge across the world.


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Posted by on July 19, 2015 in Uncategorized


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Indian government confirms costs and funding for DFCs

THE Indian government’s Cabinet Committee on Economic Affairs, chaired by the prime minister Mr Narendra Modi, has approved a revised cost estimate for the Eastern and Western Dedicated Freight Corridor (DFC) projects of Rs. 814.6bn ($US 12.8bn).

The revised cost includes Rs 266.7bn for construction of the Eastern DFC and Rs 461.8bn for the Western DFC, and land acquisition costs of Rs 80.7bn. The balance is for interest payments on loans. The revised figures exclude the 534km Sonnagar – Dankuni section which will be implemented as a Public Private Partnership (PPP).

The government also confirmed the funding arrangements for the DFCs. Rs 523.5bn will be borrowed from the Japan International Cooperation Agency (Jica) and the World Bank, while the equity requirement from the Ministry of Railways including land is Rs 238bn.

So far, 84% of land has been acquired. Design-build civil-works and other related contracts worth in excess of Rs 200bn have been awarded for 1526km of new line on the two corridors and 54 bridges on the Western DFC. Contracts for the balance of the civil works and the signalling and electrification packages are at an advanced stage of tendering.

The two DFCs will be completed in phases from 2017 to 2019. The Eastern DFC is expected to carry 153 million tonnes of freight in 2021-22, rising to 251 million tonnes by 2036-37, while the Western DFC is forecast to carry 161 million tonnes in 2021-22, increasing to 284 million tonnes in 2036-37.


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Posted by on June 27, 2015 in Uncategorized


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