PM to flag off work on freight tracks

With the Union Cabinet clearing the setting up of a Special Purpose Vehicle for the project, Prime Minister Manmohan Singh will lay the foundation stone for the first phase of the ambitious Dedicated Freight Corridor project on October 6 in Mumbai.

With the Union Cabinet clearing the setting up of a Special Purpose Vehicle SPV for the project, Prime Minister Manmohan Singh will lay the foundation stone for the first phase of the ambitious Dedicated Freight Corridor project on October 6 in Mumbai. In the process, he will be setting into motion one of the biggest infrastructure projects in the country8217;s history, one that is likely to cost Rs 2,00,000 crore at the completion of all its phases linking the Golden Quadrilateral and its diagonals. Officials say the project will not only ease the clogged railway lines for passenger trains, but will also bring into force a time-table for freight trains for the first time.

The first phase of the project will link the Delhi-Howrah and Delhi-Mumbai corridors at a cost of Rs 30,000 crore and is likely to be completed by 2011. Subsequently, the Mumbai-Chennai and Chennai-Howrah corridors will be taken up following which the diagonals of the Golden Quadrilateral will be connected through dedicated freight tracks.

What makes the project special is that it will:

8226; Separate the movement of goods train traffic from passenger trains by providing them an exclusive track

8226; Lead to the formulation of a Freight Train time-table for the first time in the country

8226; Introduce an all-new high-capacity rolling stock on the DFC network

8226; Enhance Railways8217; goods-carrying capacity in an unprecedented manner

8220;Presently, freight trains do not operate as per scheduled time tables and often their movement is tinkered with or restricted to give way to passenger trains moving on the same network. The result: a freight train from Delhi can take more than 70 hours to reach Mumbai. DFC will change that forever. If we promise to operate a freight train between Delhi and Mumbai in 20 hours on the DFC, there would be nothing stopping us,8221; said a senior Railways official.

8220;With freight trains having a capacity of 32 tonnes axle load operating on the DFC, the Railways would be able carry anything between 8,000-15,000 tonnes on a single train against the present carrying capacity of 4,000-5,000 tonnes,8221; the official added.

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As first reported by The Indian Express, the SPV to be set up for the project will be 100 per cent owned by the Railways. However, the Railway Ministry may divest its stake in favour of a Public Sector Undertaking PSU if it shows interest in the project at a later date. 8220;Even in that case, the majority stake would remain with the Railways. At no stage would any private stake would be allowed in the SPV,8221; said a senior ministry official. The ministry has also made it clear that SPV will be open to Japanese funding in the form of 8220;soft-loan8221; and will also explore multi-lateral funding by agencies like the World Bank and the ADB as well as market borrowings.

The SPV will:

8226; be governed by a Board of Directors having four functional directors and will have the chairman of the Railway Board as its ex officio chairman

8226; have a secretary-level officer as its managing director. All members on the Board of Directors will have a minimum tenure of five years. For the first Board that is constituted, the retirement age for members will be 65 years while it will be 60 years for subsequent Boards.

8226; not own any rolling stock of its own. Private players will be allowed to operate their trains on the DFC but they will have to deal with the Indian Railways for that and not the SPV

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8226; be responsible for setting up all the corridors of the project and not just the Eastern and Western ones.

The relationship between the Railways and the SPV will be defined by a Concession Agreement, which is likely to be drafted by international consultants and will give the SPV a concession for a period of 30-35 years. The Concession Agreement will lay down the principles for the operation of the DFC. For instance, it will state that the Railways will pay Track Access Charges to the SPV whenever they access the DFC8217;s tracks. Officials say the Concession Agreement will be the foundation of the bankability of the SPV because the SPV may have to raise money from the market at a later date. As for Public Private Partnership PPP in the project, it has been decided that PPP could only be allowed for the 8220;construction, ownership and maintenance of sections of the corridor for a pre-defined period after which the ownership will stand transferred to the Railways.8221; 8220;The partner would only be allowed to Build, Maintain and Transfer but not Operate on the system. Indian Railways will be the sole operator on the system and the monopoly of traffic will remain with the Railways,8221; an official said.