The Hindu Business Line : MoU signed for rail line to Krishnapatnam port

Mr J.P. Shukla (second from left), Managing Director of the Rail Vikas Nigam Ltd, exchanging a memorandum of understanding with Mr N.V. Choudhury (right), Chairman of the Krishnapatnam Port, in the presence of Mr J. Rammohan Rao, Minister for Roads and Buildings, in Hyderabad on Tuesday for the development of the railway line between Obulavaripalle and Krishnapatnam. At left is Mr Binoy Kumar, Secretary, Roads and Buildings. - P.V. Sivakumar

Hyderabad , Nov. 22

RAIL Vikas Nigam Ltd (RVNL), Krishnapatnam Port Company Ltd (KPCL) and the Andhra Pradesh Government have entered into an agreement to develop a new rail line of 114 kilometres from Obulavaripalle in Kadapa district to Krishnapatnam port in Nellore district through the public-private-partnership (PPP) model.

The Rs 580-rore project will provide rail connectivity for the iron ore projects in the Hospet-Bellary belt to the Krishnapatnam port.

The project assumes significance in the light of the Chennai Port's decision to discontinue handling of iron ore from 2007-08, the RVNL Managing Director, Mr J.P. Shukla, told newspersons here on Tuesday.

The alignment takes off from Obulavaripalle, an existing railway station on the Gooty-Renigunta section of the Guntakal division of South Central Railway.

The new line significantly reduces the distance for iron ore exports vis-à-vis the Chennai port.

As per the MoU, a special purpose company - Krishnapatnam Rail Road Company Ltd - will execute the railway line project.

The project will be funded through a debt-equity ratio of 1:1.

According to the RVNL Executive Director, Mr Sanjiv Garg, the project will raise Rs 266.1 crore as equity and Rs 238 crore as debt with a viability gap funding from the Government of India for an amount of Rs 50 crore.

Both RVNL and KPCL will invest Rs 79.8 crore each and have an equity holding of 30 per cent.

The AP Government will invest Rs 49.2 crore for 13 per cent equity, while strategic investors, mostly iron ore exporters, will pump in Rs 61.2 crore, constituting an equity holding of 27 per cent.

According to the AP Minister for Transport and Roads and Buildings, Mr Jakkampudi Rammohan Rao, the new rail project is of strategic importance to the business and social requirements of the region.

It promises to make the country's imports and exports from the region more competitive in the international markets and make the interior areas of Rayalaseema accessible to the coastal areas.

Presenting details on the traffic potential for the railway project, Mr Garg said the iron ore transportation would touch six million tonnes per annum (tpa) by 2010 and go up to nine million tpa by 2016.

The thermal coal traffic through the new railway line is estimated to touch two million tpa by 2010 and 4.5-million tpa by 2016, while barytes and others will amount to 0.6-million tpa. The iron ore exporters are expected to enjoy direct savings of Rs 8 crore to Rs 18 crore per million tonne of ore exported through the new railway project, Mr Garg said.

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