The Railways plans to tap business opportunities to expand its lines, from now. On Tuesday, it announced plans to set up two such projects and expanded the scope of several others to make more freight run on trains. The first of these will connect coal mines in Jharkhand with power stations financed by Coal India while another will connect minor ports in Western India with the hinterland.
The plans are part of the rail makeover that is expected to go through under the NDA government in the next few years. Railways has taken up port connectivity on priority through the public-private partnership model to build links to Jaigarh, Dighi, Rewas, Hazira, Tuna, Dholera and Astranga ports. It will cost about Rs 4,000 crore.
Similarly, railway minister DV Sadananda Gowda said, critical coal connectivity lines in Tori-Shivpur-Kathautia Area (in North Karanpura, Jharkhand), Jharsuguda-Barpalli-Sardega (in Ib Valley, Orissa) and Bhupdeopur-Raigarh-Mand Area (in Chhattisgarh) will be speeded up. These areas are packed with rich mines but have just no ways to transport those coal except by roads. The minister said the new rail connections will bring nearly 100 million tonnes of incremental traffic to Railways and will also facilitate faster evacuation of coal to power houses.
Coal India has already provided over Rs 300 crore to Railways for the projects. The Railways has been slammed for not being able to move additional coal from the mines because of which Coal India has complained it cannot raise production, while supplies at power plants have often come down to critical levels.
Rana Kapoor, MD and CEO of Yes bank said, “Implementation of these proposals within the Budget will revolutionalise transportation and logistics, and reduce the cost of doing business, and generate huge efficiencies and productivity for the nation”. Jindal Steel and Power Group CEO and MD Ravi Uppal also described the setting up connectivity between ports and mines as a positive move.
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The plans for private sector participation also include private investment in railway logistics and that of private freight terminals. This includes setting up of logistics parks that will provide for warehousing, packaging, labelling to door-to-door delivery of consignments. Similarly the Railways plans to take off its parcel business from out of the current passenger platforms to separate terminals where dedicated trains will run on fixed timetables. Private sector investment will be sought for procurement of parcel vans and parcel rakes, Gowda announced.
The Budget has also outlined plans to move agricultural products through providing temperature controlled storage facilities at 10 centres that are clearly large despatch points for fruits and vegetables, including one at Sanand and that of milk tanker trains with NDDB and Amul, both measures picked up from the BJP manifesto.
The projects are in line with the plans for larger ones like the two dedicated freight corridors. In the current financial year awarding of civil construction contracts of nearly 1,000 kms for these corridors has been targeted. An agreement would be signed with the World Bank to raise $100 million for Kanpur-Mughalsarai section of the Eastern corridor in this year itself, the minister said.
The key for execution of all of them would be ‘close monitoring’, Gowda said. The costs for both the Western and Eastern corridors was estimated in January 2007 at Rs 28,000 crore has jumped now to Rs 54,000 crore. At a debt equity ratio of 2:1, the capital structure of the Dedicated Freight Corridor Corporation of India Limited is becoming steep.