Rlys to shell out 2 bn for Dedicated Freight Corridor

Out of the estimated 6 billion required to construct the first phase of the Dedicated Freight Corridor...

Out of the estimated 6 billion required to construct the first phase of the Dedicated Freight Corridor DFC, Indian Railways has decided to spend 2 billion from its own coffers and seek a long-term loan of 4 billion from Japan.

The issue is likely to figure prominently during Japanese Land, Infrastructure and Transport Minister Tetsuzo Fuyushiba8217;s visit to Rail Bhawan on April 30.

It is learnt that the Japanese side wants to sign a Memorandum of Understanding between the two countries on the DFC project which will have computerised controls on both the Mumbai-Delhi and Delhi-Howrah routes. The Japan International Cooperation Agency JICA is targeting to submit it8217;s feasibility report on the project by October this year.

8220;We have informed the Department of Economic Affairs about our loan requirements and they have forwarded them to the Japanese government. While Railways would be spending 2 billion, we are looking for a 4 billion assistance from Japan in terms of a long term loan. A team comprising officials of Department of Economic Affairs and Indian Railways would negotiate the loan,8221; a top Rail Bhawan official told The Indian Express.

Under the loan agreement being worked out, Railways will be exempted from any payment during the first 10 years and will only pay back the loan in the subsequent 30 years. Railway officials are hopeful of securing the loan at an interest rate of less than 2 per cent.

The long-term loan being sought by the Railways will have two components 8212; the Overseas Development Assistance ODA and the Special Technical Economic Program STEP.

8220;There will be no strings attached to ODA, Railways will have to spend 30 per cent of the total loan amount procured under STEP on buying equipment from Japanese industries, based either in Japan or India,8221; said the official. 8220;This 30 per cent condition, however, is negotiable and not a major cause of concern.8221;