Decks for a Rs 17,700 crore Japanese loan to fund Indian Railways Western Dedicated Freight Corridor (DFC) may finally be cleared on Thursday,when the Union Cabinet is likely to consider a Railways Ministry proposal to this effect.
Latest estimates put the total cost of the Western DFC at Rs 26,124 crore. The loan is being negotiated in the form of an Overseas Development Assistance (ODA) under the Special Terms of Economic Partnership (STEP) scheme of the Japan Government and is expected to kick-start works on the Rewari-Vadodara section.
The 1,483 km Western DFC will connect Tughlakabad and Dadri near Delhi to the Jawahar Lal Nehru Port in Mumbai. The 1,806 km Eastern DFC,on the other hand,will connect Ludhiana with Dankuni near Kolkata and will be extended to serve the new deep sea port in Kolkata area. Sources said that latest estimates have put the year 2017 as the completion year for both DFCs.
According to sources,the Japanese ODA will commence with an engineering services loan of approximately Rs 130 crore. The ODA loan will be a soft loan with an interest rate of 0.2 per cent per annum,is likely to have a repayment period of 30-40 years,and a moratorium of 10 years.
Under the STEP loan,there is a provision to ensure that prime contractors must be Japanese firms although the sub-contractors may
be from any country. Further,one of the major conditions in the loan stipulates that 30 per cent of the total amount of contracts (excluding consulting services) financed by the STEP loan must be accounted for by goods and services from Japan,sources said.