Laloo’s pet project hits Japan loan rider

Union Railway Minister Laloo Prasad Yadav’s ambitious plan for a dedicated freight corridor—expected to cost over Rs 60,000 crore&...

Union Railway Minister Laloo Prasad Yadav’s ambitious plan for a dedicated freight corridor—expected to cost over Rs 60,000 crore—has run into rough weather with Japan offering a loan on conditions which are not acceptable to the government.

In lieu of the Rs 20,000 crore that Japan offered as soft loan, at an interest of 0.45 per cent, the Japanese want 30 per cent of the work to be done by their own companies, in addition to technical assistance. This condition is being seen as too harsh by the Railway Ministry and also by the Planning Commission, which has been closely monitoring the project.

According to sources, the government has asked the Japanese to reconsider the condition.

In the meantime, the railways have already started looking for other funding options including the World Bank and the Asian Development Bank.

Japan, during the recent visit of their Prime Minister Junichiro Koizumi, had agreed to invest Rs 20,000 crore in the first phase of the corridor—the 2,800-km Delhi-Calcutta and Delhi-Mumbai sections. The corridor, along the Golden Quadrilateral, is expected to connect the four metros and the major ports of the country. Work on the other sections—Calcutta-Mumbai, Calcutta-Chennai, Mumbai-Chennai and Delhi-Chennai—is planned in the second phase.

The proposal for the dedicated freight corridor had been cleared by the Planning Commission and the Infrastructure Committee, headed by Prime Minister Manmohan Singh. It was also included in the mid-term proposal of the Tenth Five Year Plan.

The Railway Ministry had planned to complete the corridor—separate from the existing GQ lines—in the next five to seven years. Sources at Rail Bhavan admitted that the problem arising from Japanese condition may somewhat delay the project, but officials were not unduly worried.

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‘‘We are exploring other funding possibilities, and are in touch with the World Bank and the ADB. The chances are bright as both the agencies have enough experience in dealing with the railways,’’ sources close to Laloo said.

‘‘We also expect to raise Rs 1,400 crore from Railways’ own sources—Rs 1,000 crore every year by increasing capacity of wagons and another Rs 400 crore through premium freight registration. The additional funds will be used for the freight corridor,’’ sources added.

The Railways also expected to raise money through public-private participation, which depended on traffic availability on various stretches.

The aim of the corridor was to facilitate faster movement of goods. Due to the GQ being over-saturated, the average speed of freight trains, at present, was 25 kmph. With the dedicated freight corridor in place, the freight trains will be able to touch upto 150 kmph, also leaving the existing GQ free for faster running of passenger trains.