De-risking private player role in freight corridors proposed
The Dedicated Freight Corridor Corporation of India (DFCCIL) has proposed derisking the private concessionaire that develops the Son Nagar (New Chiraila Pauthu) to Andal section of the Eastern Dedicated Freight Corridor (DFC). DFCCIL intends to develop this portion of the DFC through a design-build-finance-operate-maintain-transfer model on a public-private participation basis.
“Private players said they were sceptical about the projected traffic on the proposed section of the freight corridor over a 30-year contract period,” said R K
Jain, managing director,
DFCCIL.
“The Indian Railways and DFCCIL will take over the traffic and tariff risk to reduce the quantum of risk on the part of the concessionaire. The concessionaire will be responsible for the design, construction, finance, operations, and maintenance of the project,” added Jain.
This section is expected to serve major powerhouses, industrial corridors, and multi-modal logistics parks (MMLPS) in Haryana, Punjab, Delhi, and Uttar Pradesh. “Increasing trends in finished steel consumption and production will drive the growth of steel traffic on the route. Further, to attract more traffic and achieve the targeted rail share of freight, DFCCIL plans to develop MMLPS, sidings, and feeder routes for last-mile connectivity along the section alignment,” said an official statement.
DFCCIL has been holding consultations with private players. Probable bidders are worried that with renewable energy projects coming up, a lower demand for coal could hamper the viability of freight operations on this route. Since train operations are ultimately a prerogative of the railways, there could be fewer trains on the freight corridor in a bid to cut costs. A third concern is of a possible alternative route, like a parallel road route, that could eat into rail freight traffic.
“It is being proposed that the concessionaire will be paid a fixed amount towards operations and maintenance (O&M), irrespective of the traffic load on the route,” said Jain.
Currently, the annual O&M charges on the freight corridor vary between 10 per cent and 20 per cent of the total project cost.
Probable bidders are worried that with renewable energy projects coming up, a lower demand for coal could hamper the viability of freight operations