The Hindu Business Line : Kutch Rly project cost shoots up by Rs 100 cr

THE cost of the Rs 450-odd-crore Kutch Railway Company Ltd (KRCL) project has escalated by an estimated Rs 100 crore following delay in kicking off the project on the ground. Earlier, KRCL was trying to attain financial closure by raising Rs 250 crore.

But with increase in steel costs and ballast costs, officials in the know point out that the company would now have to recalculate the extent of the escalation and get fresh clearance from the board for raising additional funds.

KRCL is one of the country's longest gauge conversion projects, for improving rail connectivity to ports, undertaken by a public-private partnership. With an equity capital of Rs 200 crore, put together by Rail Vikas Nigam Ltd (RVNL), Kandla Port Trust, Gujarat Mundra Adani Port and the Gujarat Government, KRCL was originally required to rope in a debt component of Rs 250 crore.

In the project, RVNL has an equity participation of Rs 100 crore, followed by Kandla Port Trust with Rs 52 crore, Gujarat Mundra Adani Port with Rs 40 crore and the Gujarat Government, Rs 8 crore. The equity partners are understood to have voiced their concerns to the railway officials pointing out the need to hasten work on the project.

"The fear is that owing to delays, the project cost should not increase to such an extent that it becomes economically unviable," said a source.

"With increase in cost, we need to see if the entire cost has to be raised as debt or whether the equity partners would put in additional funds," said another senior official. Incidentally, the project was targeted for completion by the end of current fiscal.

"In the backdrop of escalating costs, we would try our best to attain financial closure within the next one-and-a-half months," said the official, adding that the original project cost was estimated more than three years ago.

About Rs 140 crore has already been spent on the project, he added.

KRCL, a special purpose vehicle created to provide shorter route to the ports of Kandla and Mundra, would engage in gauge conversion work in the 301 km route between Palanpur and Gandhidham after the financial closure.

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Kutch Rly project cost shoots up by Rs 100 cr