Tatas, Essar race with foreign firms to build freight corridor

After years of planning, the 3,300-km Dedicated Freight Corridor (DFC) is finally on the horizon, with Indian and global construction companies vying for around Rs 12,000 crore (Rs 120 billion) worth of civil works for two stretches.

Among these are not only the Tatas, Essar and IVRCL Infrastructures Projects Ltd, but also Chinese, Russian and Spanish firms.

The eastern corridor of the DFC is from Ludhiana to Dankuni (West Bengal). The western one is from Dadri, close to Delhi, till Navi Mumbai.

China Railway First Group, a part of the Chinese government-owned China Railway Engineering Corporation, in consortium with Soma, Tata-Aldesa, IVRCL-KMB, Essar-Patel-BSCPL are among the 10 companies that have bid to build the Khurja-Bhaupur (343 km) stretch on the eastern one.

Bids have been also been asked for the Rewari-Palanpur (640 km) stretch on the western one.

Of the 12 companies technically qualified for the Khurja-Kanpur section, 10 gave financial bids, while Lanco Infratech and Hindustan Construction decided to skip the race.

Two Japanese-led consortiums - Sojitz Corporation-Larsen & Toubro and Mitsui-IRCON Leighton - are expected to give financial bids on January 21 for the Rewari-Palanpur section of the western corridor, sources said.

The land acquisition process for the two stretches is almost complete. The 343-km project on the eastern side was sliced into three subsets, and the bidders were qualified to bid for one, two or all three.

In the bids, the consortia have offered various levels of discounts, depending on the size of projects they get.

The contractor for the World Bank-funded eastern corridor is likely to be announced by the end of the month, according to sources. The bids are being evaluated by the Dedicated Freight Corridor Corporation of India (DFCCIL) and the World Bank.

The World Bank approved a loan of $975 million in October 2011 for the first phase of the eastern corridor (Khurja-Bhaupur). With the DFCCIL's compliance with various triggers, the World Bank is also expected to sanction $1,050 million loan for the Kanpur-Ludhiana

section.

The World Bank has agreed in principle to part-finance the Eastern Corridor project from Mughal Sarai to Ludhiana, which has been divided into three phases. The total in-principle loan commitment is $2.725 billion.

In the eastern corridor, the acquisition is around 2,000 ha, while about 3,200 ha is needed in the western corridor. Eighty per cent of the entire alignment of the eastern corridor is parallel to the existing railway track.

However, the alignment takes a detour to skirt busy towns/cities and other inhabited areas, wildlife sanctuaries and forest areas. The major detour alignment on the eastern corridor is at the Gurpa Gujandi Ghat section, Gaya, Allahabad, Kanpur, Aligarh, Meerut and Tundla.

The Indian Railways' quadrilateral linking the four cities of Delhi, Mumbai, Chennai and Howrah (Kolkata), and its two diagonals (Delhi-Chennai and Mumbai-Howrah), add to a route length of 10,122 km.

This carries 55 per cent of revenue earning freight traffic. The existing trunk routes of Howrah-Delhi on the eastern corridor and Mumbai-Delhi on the western one are saturated, with line capacity utilisation between 115 and 150 per cent.

The upgraded design features of the DFC are meant to sustain 1.5 km of train length and a 100 kmph speed with a load of 15,000 tonnes.

As against the norm of a 22.5-tonne axle load on the existing network, that on DFC will be 32.5 or 25 tonnes, comparable to the standard in the US, Russia and China.

On the western corridor, DFCCIL has also committed funding from Japan International Cooperation Agency from Rewari to Palanpur and JNPT to Vadodara.

The proposed funding is under 'special terms of economic participation' between India and Japan. The value of the proposed loan - a soft loan with the repayment period of 40 years - is 295 billion yen (roughly Rs 20,000 crore).