The Hindu Business Line : Railways to have controlling stake in freight corridor SPV

THE Railways will have controlling stake in an SPV that would be formed to implement the dedicated rail freight corridor. The SPV would have a revenue sharing arrangement by the way of apportioning earnings for trains run on different tracks.

While the Delhi-Mumbai leg of the corridor would be based on diesel traction, the Delhi-Howrah leg is likely to be on electric traction. The corridor would have a 30-tonne axle load eventually.

The Railway Budget would have an indication of funding pattern of the dedicated freight corridor. The Railways would also need to have technology transfer tie-ups with international countries for tracks, bridges, design of wagons, and signalling system of the freight corridor.

"The pre-feasibility study done by RITES would be fully ready within a week. We plan to put it on a fast track and clear it in another week or 10 days," the Railway Board Chairman, Mr J.P. Batra, told Business Line.

He added that this would be possible as the Railways has been fully involved with RITES through regular consultations. The study would then be presented to the expanded board of Planning Commission for its views, after whose approval the proposal would be included in the Railway Budget.

"The Minister (Mr Lalu Prasad) has made it clear that this will be under the control of the Railways. Thus, the funding pattern of the SPV would be accordingly devised," said Mr Batra.

As the construction of corridor would cost anything between Rs 20,000 crore and Rs 30,000 crore, there is a need to raise resources from the market, he added.

"We are in consultation with the Planning Commission to develop a funding mechanism."

Other points being discussed are planning, plan approval, execution, and manning and operation of the corridor.

While interacting with the Prime Minister, Dr Manmohan Singh, the Japanese Prime Minister had agreed to consider funding feasibility.

Japan International Cooperation Agency (JICA) has tied up with RITES and is conducting the feasibility study, which is expected to be over in 12-18 months.

"The western leg would be on diesel traction as we plan to run double stack containers. Though, theoretically, it is possible to run double stack container trains on electric traction, no country runs them currently," Mr Batra said, indicating that there is lack of prior experience.

"The revenue sharing arrangement would be required as we have to repay the funds from investors."

Thus, the earnings would be apportioned between various rail routes used, he said.