Continued from Volume V, Issue No. 48…
Recommendations of the task force
The task force in its report recommended various models in existence for the dedicated freight corridor:
1. Vertically integrated structure: This model is followed in countries like China, Russia, Brazil, Mexico etc where railway systems are run either by state owned companies or privately owned regional companies. The integrated railways are run by the private sector on the basis of concessions or franchises.
2. The second structure in which the dominant user is integrated with infrastructure while incremental users have access for which they pay access charges. This model is followed in US wherein one vertically integrated freight railways uses the infrastructure of another entity. In Japan, the Japan Rail Freight Corporation runs as Govt undertaking on infrastructure owned by a private regional undertakings.
3. The third model in which the infrastructure is separated from the users but remains accessible to all under an access regime. The EU has adopted this model since 1991.This model ensures management independence of railway undertakings with no discrimination while sharing the infrastructure.
Map of proposed Dedicated Freight Corridor
The Railway Ministry initiative
Ministry of Railways have planned to construct a new Dedicated Freight Corridor (DFC) covering about 2762 route km (Eastern Corridor -1232 Km and Western Corridor -1469 Km) on two corridors, Eastern Corridor from Ludhiana to Sone Nagar and Western Corridor from Jawahar Lal Nehru Port Mumbai to Tughlakabad/Dadri along with interlinking of two corridors at Khurja. Upgradation of transportation technology, increase in productivity and reduction in unit transportation cost are the focus areas for the project. Based on the feasibility study conducted by RITES for Eastern and Western Corridors and their financial viability, the construction of dedicated freight corridors were approved “in principle” by CCEA in its meeting held on February 2, 2006 with the directions for expeditious finalization of modalities regarding resources and the Special Purpose Vehicle for implementation of the project.The total length of the dedicated freight corridor is 11,500 km and is expected to involve an investment of Rs 1,00,000 crore. While the western corridor will have a length of 1,469 km and seven feeder routes, the eastern corridor will have a track length of 1,232 km and 17 feeder routes. Both the western and eastern corridors will be connected between Dadri and Khurja to facilitate transfer from one corridor to the other.
About the SPV
A special purpose vehicle named Dedicated Freight Corridor Corporation of India Limited (DFC-CIL) has been formed. The SPV is registered as a company under the Companies Act 1956 and managed by a Board of Directors (BoD), which would include the Managing Director, four full time functional Directors. Chairman, Railway Board will be the ex-officio Chairman of the BoD. The first-time Managing Director and four full-time Directors will be appointed for a tenure of five years subject to an overall age limit of 65 years. One of the Government nominees to the Board of Directors will be from Ministry of Railways and the other from the Planning Commission. The independent Directors would be selected carefully from such fields as may be relevant for the SPV (academics, law, finance, human resource etc.) to bring fresh expertise and insights to the BoD.
The SPV will have a paid-up capital of Rs. 50 crores and authorized capital of Rs. 4000 crores, which can be increased subsequently as per future requirements. Initially the SPV will be constituted with 100% equity by Ministry of Railways. The equity in the SPV will be offered to PSUs/Government institutions in case they evince interest in future subject to retention of majority stake by Ministry of Railways.
The debt equity ratio will, however, not exceed 2:1.The funding offered by Government of Japan under Special Terms of Economic Partnership (STEP) being coordinated by JICA/JBIC should be utilized for the project. SPV would be fully empowered to take decisions in respect of project estimates, award of contracts, resource mobilization and hiring of staff.
The SPV will plan, construct, own and maintain the dedicated freight corridor under a Design, Build, Construct and Maintain and Transfer Concession to be given by Ministry of Railways for a period of thirty years after the start of commercial operations of the full corridor.
The concession may be extended further by mutual agreement. It will be responsible for movement of trains on its system. The SPV will not own or lease any rolling stock nor will it do any freight business directly with the clients. Actual train operation including provision of motive power would continue to be vested in the Indian Railways. The relationship between the Ministry of Railways and the SPV should be codified in a concession agreement.
Salient Features of the Project
The main features of the project are as follows:
• Both Eastern & Western Corridors will be made suitable for running of heavier trains of 25 tonne axle load. Maximum moving dimensions on the routes will be more liberal and comparable to world standards in order to permit heavier and longer trains.
• While Eastern Corridor will be electrified, the Western Corridor will operate on diesel traction in order to permit Double Stack Container operation.
• Bridges and fixed structure, which have long life, would be laid on this route for 30 tonne axle load. The loops provided on the route (DFC) should have length to accommodate double trains (1500 meter).
• Logistics Parks are proposed to be developed along the Dedicated Freight Corridor.
• The Eastern Corridor as approved by the Indian Railways network will also be developed to carry heavier traffic of coal and steel.
• The total length of feeder routes for Eastern Corridor will be about 3000 kilometers.
• The Western Corridor will start from Jawaharlal Nehru Port, New Mumbai and will be routed via Vadodara, Ahmedabad, Palanpur and Rewari to Tuglakabad and Dadri.
• The feeder routes of the Western Corridor connecting Ports of Gujarat will be upgraded. A feeder route from Rewari to Ludhiana via Hissar will also be developed to serve the States of Punjab and Haryana. This corridor will carry mostly container traffic.
• Both Eastern and Western Corridors will be connected between Dadri and Khurja.
• This 1469 kilometers long Corridor, fit for double stack container operation is estimated to cost Rs. 11,446 crores. Feeder routes on the existing Indian Railways network will also be developed for moving double stack container trains
• Total length of feeder routes for Western Corridor will be about 1500 kilometers.
(to be continued..)
Recommendations of the task force
The task force in its report recommended various models in existence for the dedicated freight corridor:
1. Vertically integrated structure: This model is followed in countries like China, Russia, Brazil, Mexico etc where railway systems are run either by state owned companies or privately owned regional companies. The integrated railways are run by the private sector on the basis of concessions or franchises.
2. The second structure in which the dominant user is integrated with infrastructure while incremental users have access for which they pay access charges. This model is followed in US wherein one vertically integrated freight railways uses the infrastructure of another entity. In Japan, the Japan Rail Freight Corporation runs as Govt undertaking on infrastructure owned by a private regional undertakings.
3. The third model in which the infrastructure is separated from the users but remains accessible to all under an access regime. The EU has adopted this model since 1991.This model ensures management independence of railway undertakings with no discrimination while sharing the infrastructure.
Map of proposed Dedicated Freight Corridor
The Railway Ministry initiative
Ministry of Railways have planned to construct a new Dedicated Freight Corridor (DFC) covering about 2762 route km (Eastern Corridor -1232 Km and Western Corridor -1469 Km) on two corridors, Eastern Corridor from Ludhiana to Sone Nagar and Western Corridor from Jawahar Lal Nehru Port Mumbai to Tughlakabad/Dadri along with interlinking of two corridors at Khurja. Upgradation of transportation technology, increase in productivity and reduction in unit transportation cost are the focus areas for the project. Based on the feasibility study conducted by RITES for Eastern and Western Corridors and their financial viability, the construction of dedicated freight corridors were approved “in principle” by CCEA in its meeting held on February 2, 2006 with the directions for expeditious finalization of modalities regarding resources and the Special Purpose Vehicle for implementation of the project.The total length of the dedicated freight corridor is 11,500 km and is expected to involve an investment of Rs 1,00,000 crore. While the western corridor will have a length of 1,469 km and seven feeder routes, the eastern corridor will have a track length of 1,232 km and 17 feeder routes. Both the western and eastern corridors will be connected between Dadri and Khurja to facilitate transfer from one corridor to the other.
About the SPV
A special purpose vehicle named Dedicated Freight Corridor Corporation of India Limited (DFC-CIL) has been formed. The SPV is registered as a company under the Companies Act 1956 and managed by a Board of Directors (BoD), which would include the Managing Director, four full time functional Directors. Chairman, Railway Board will be the ex-officio Chairman of the BoD. The first-time Managing Director and four full-time Directors will be appointed for a tenure of five years subject to an overall age limit of 65 years. One of the Government nominees to the Board of Directors will be from Ministry of Railways and the other from the Planning Commission. The independent Directors would be selected carefully from such fields as may be relevant for the SPV (academics, law, finance, human resource etc.) to bring fresh expertise and insights to the BoD.
The SPV will have a paid-up capital of Rs. 50 crores and authorized capital of Rs. 4000 crores, which can be increased subsequently as per future requirements. Initially the SPV will be constituted with 100% equity by Ministry of Railways. The equity in the SPV will be offered to PSUs/Government institutions in case they evince interest in future subject to retention of majority stake by Ministry of Railways.
The debt equity ratio will, however, not exceed 2:1.The funding offered by Government of Japan under Special Terms of Economic Partnership (STEP) being coordinated by JICA/JBIC should be utilized for the project. SPV would be fully empowered to take decisions in respect of project estimates, award of contracts, resource mobilization and hiring of staff.
The SPV will plan, construct, own and maintain the dedicated freight corridor under a Design, Build, Construct and Maintain and Transfer Concession to be given by Ministry of Railways for a period of thirty years after the start of commercial operations of the full corridor.
The concession may be extended further by mutual agreement. It will be responsible for movement of trains on its system. The SPV will not own or lease any rolling stock nor will it do any freight business directly with the clients. Actual train operation including provision of motive power would continue to be vested in the Indian Railways. The relationship between the Ministry of Railways and the SPV should be codified in a concession agreement.
Salient Features of the Project
The main features of the project are as follows:
• Both Eastern & Western Corridors will be made suitable for running of heavier trains of 25 tonne axle load. Maximum moving dimensions on the routes will be more liberal and comparable to world standards in order to permit heavier and longer trains.
• While Eastern Corridor will be electrified, the Western Corridor will operate on diesel traction in order to permit Double Stack Container operation.
• Bridges and fixed structure, which have long life, would be laid on this route for 30 tonne axle load. The loops provided on the route (DFC) should have length to accommodate double trains (1500 meter).
• Logistics Parks are proposed to be developed along the Dedicated Freight Corridor.
• The Eastern Corridor as approved by the Indian Railways network will also be developed to carry heavier traffic of coal and steel.
• The total length of feeder routes for Eastern Corridor will be about 3000 kilometers.
• The Western Corridor will start from Jawaharlal Nehru Port, New Mumbai and will be routed via Vadodara, Ahmedabad, Palanpur and Rewari to Tuglakabad and Dadri.
• The feeder routes of the Western Corridor connecting Ports of Gujarat will be upgraded. A feeder route from Rewari to Ludhiana via Hissar will also be developed to serve the States of Punjab and Haryana. This corridor will carry mostly container traffic.
• Both Eastern and Western Corridors will be connected between Dadri and Khurja.
• This 1469 kilometers long Corridor, fit for double stack container operation is estimated to cost Rs. 11,446 crores. Feeder routes on the existing Indian Railways network will also be developed for moving double stack container trains
• Total length of feeder routes for Western Corridor will be about 1500 kilometers.
(to be continued..)
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