Rlys’ reluctance to cede control delays $1-billion World Bank loan

Mamuni Das New Delhi | Updated on April 03, 2013


Dedicated Freight Corridor Corporation wants autonomy on spare track capacity

A World Bank loan of over $1 billion meant for the eastern dedicated rail freight corridor may get delayed as the Indian Railways is not letting the Dedicated Freight Corridor Corporation of India Ltd’s (DFCCIL) gain operational autonomy.

Ironically, the DFCCIL is a special purpose enterprise set up to speed up the mega infrastructure project, and is wholly owned by the Railways!

Concession agreement

The relationship between DFCCIL and Railway Ministry is a part of the concession agreement, which has been awaiting finalisation with the Finance Ministry for almost a year-and-a-half. The concession agreement is a key requirement for the $1-1.2 billion loan from World Bank to build the Kanpur-Mughalsarai stretch of rail track.

But arriving at a consensus on the concession agreement between Finance Ministry, Railways and DFCCIL has become so difficult that World Bank may be asked to relax this condition. Indicating that this is already being considered, a Railway official said, “After all, as a lending agency, World Bank is giving a loan to DFCCIL through Indian Railways and Finance Ministry. If the repayment will be done by Indian Railways, it should not bother about the arrangement between Railways and DFCCIL.”

DFCCIL is also close to acquiring the requisite land for the project. “Almost 90 per cent of the land has already been acquired for track. Construction should start early to ensure there delays in starting construction work may lead to unauthorised settlements,” explained a source.

Other conditions for getting the loan are also likely to be achieved soon.


DFCCIL wants some autonomy on the spare track capacity, which will be available after serving the Railways’ freight traffic. “DFCCIL could at least be allowed to set tariffs for non-traditional traffic such as automobile and other white goods that are moved within the freight corridor network,” said a source involved in the process.

Railways is unwilling to give any tariff setting power to DFCCIL as it may eventually emerge as a competition to the Railways by setting lower tariffs than the Indian Railways’ network.

Railway Ministry just wants to provide track access charges to DFCCIL that will cover operational and maintenance costs. In this case, DFCCIL will not have an incentive to increase profitability.

“The Railway Ministry wants DFCCIL to be perpetually dependent on it with a cost plus formula. In that case, DFCCIL could just have been a construction arm of the Ministry. Now that DFCCIL is a public sector firm, it should have some autonomy to earn some incremental revenues,” said a Government source.

Also, on the track access charges to be paid to DFCCIL, there is a view that an independent body like the rail tariff regulator should fix the charges, and not Railways itself.


Published on April 03, 2013

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