Private players likely to add steam to eastern DFC
The last leg of the Eastern Dedicated Freight Corridor (EDFC) — from Sonnagar to Gomoh — may get a fresh lease of life now, with the Dedicated Freight Corridor Corporation of India (DFCCIL) initiating talks with corporates to develop the stretch on a public private partnership (PPP) model.
At least 23 domestic and global private sector majors — including Reliance Industries (RIL), Tata Projects, Adani Ports and Logistics, GMR Infrastructure, Mitsui, Siemens, and KEC International — participated in a roadshow held by DFCC in Delhi, on Wednesday.
DFCCIL is likely to float a request for quotation within two months for this stretch covering 263.7 km, said Anurag Sachan, managing director of DFCCIL.
In addition to infrastructure players, consumers such as NTPC and financing agencies such as the World Bank and Japan International Cooperation Agency (JICA), were also part of the meet. The World Bank is funding part of Eastern DFC through a loan of $2.36 billion, while JICA is funding parts Western DFC by offering ~38,722 crore in credit.
This stretch will be part of the last 538 km of the EDFC from Sonnagar (Bihar) to Dankuni (West Bengal), which is expected to cost ~15,000 crore. For the remainder of the EDFC, the World Bank has extended a loan.
DFCCIL has come out with an annuity model, based on which the private partner will get a minimum yearly return of around ~2,140 crore for the private players, irrespective of the traffic handled by the EDFC.
“Over 90 per cent of the land has been acquired for the project. A similar outreach programme for foreign investors was held a few months ago,” Sachan told Business Standard. The company expects 98 per cent of the land to be acquired by the time of signing of the contracts.
Another DFCCIL source said a 194-km area of EDFC, between New Bhadan and Khurja, was likely to be commissioned by March 2020. Majority of traffic in the route will include coal and iron.
“The advantage for private players, being part of this PPP, will be an internal rate of return at 14 per cent, and the concessionaire would receive fixed annuity payments from DFCCIL for a period of 15 years after the commercial operation date of the project,” said another official.
If public sector majors like NTPC or Coal India show any interest, the possibilities of a joint venture cannot be ruled out. Commissioning of the two dedicated corridors is vital for increasing the share of Railways in the country’s overall freight, from 33 per cent to around 50 per cent by 2030.
Based on an estimate, EDFC may carry close to 264 million tonnes (mt) of traffic and WDFC another 284 mt over a period of 20 years. The section is also projected to handle 100 rakes per day in both directions by FY45.