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Key Takeaways
Move to tackle growing cargo traffic through a dedicated route
Dedicated Freight Corridor Corp (DFCC), a special purpose vehicle, was set up to
plan and develop, construct, maintain and operate a dedicated freight corridor for
transport of cargo, to save time and cost.
The golden quadrilateral, connecting India's four major metro cities is saturated,
operating at 110-150% of capacity. Growth in demand for coal in the power sector
and rapid industrialization calls for dedicated freight transport facilities. A feasibility
study was carried out by RITES, which found a dedicated freight corridor
remunerative.
Eastern/western corridor work initiated, to be operational in December 2016
DFCC initiated work on two corridors, approved by railway ministry. Work on the
eastern corridor (from Dankuni in West Bengal to Ludhiana in Punjab) and the
western corridor (from JNPT to Dadri) has commenced or is in the process of being
awarded.
DFCC plans to commission a 66km double-line track in the Mughalsarai-Sonnagar
section, (cost INR8.5b) by December 2014 on the eastern corridor.
It plans to finalize project awards for the stretch on both corridors by mid-FY13, to
achieve the stated timeline of project completion by December 2016.
The government of Japan will provide a special economic partnership loan of 679b
yen to finance construction of the western corridor and procurement of locomotives.
The loan will be extended on soft terms for 40 years with a moratorium of 10 years.
The remaining cost will be borne by the Ministry of Railways in the form of equity to
DFCC. The first tranche of the loan for 90b yen for construction between Rewari
and Vadodara has been signed. Another 274b yen funding for Phase II (Vadodara-
JNPT) is under negotiation and expected to be finalized by March 2012.
For the eastern corridor, the section from Ludhiana to Mughalsarai will be funded by
a USD2.7b World Bank loan and the section from Mughalsarai to Sonnagar will be
funded by the government of India. Sonnagar to Dankuni will be on a public-privatepartnership
basis.
Project cost INR780b, packages to include civil/electrical contracts
DFCC's project cost had been originally envisaged at INR280b, as estimated by
RITES in 2006. This has gone up due to: (1) a change in alignment at few junctions,
(2) increase in commodity prices, execution timelines and (3) increase in interest
during construction (IDC, INR100b+) and thus, project cost has been revised to
INR780b.
Of this however, IDC is a soft cost (payable with debt, only once the project is
operational). Therefore, the funding is required for ~INR650b+.
DFCC indicated that the packages could be broadly divided into the length for both
the corridors and the scope of civil work would be ~60% (including laying tracks),
and signaling/electrical works will be ~30%. The rest is IDC ~10%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Move to tackle growing cargo traffic through a dedicated route
Dedicated Freight Corridor Corp (DFCC), a special purpose vehicle, was set up to
plan and develop, construct, maintain and operate a dedicated freight corridor for
transport of cargo, to save time and cost.
The golden quadrilateral, connecting India's four major metro cities is saturated,
operating at 110-150% of capacity. Growth in demand for coal in the power sector
and rapid industrialization calls for dedicated freight transport facilities. A feasibility
study was carried out by RITES, which found a dedicated freight corridor
remunerative.
Eastern/western corridor work initiated, to be operational in December 2016
DFCC initiated work on two corridors, approved by railway ministry. Work on the
eastern corridor (from Dankuni in West Bengal to Ludhiana in Punjab) and the
western corridor (from JNPT to Dadri) has commenced or is in the process of being
awarded.
DFCC plans to commission a 66km double-line track in the Mughalsarai-Sonnagar
section, (cost INR8.5b) by December 2014 on the eastern corridor.
It plans to finalize project awards for the stretch on both corridors by mid-FY13, to
achieve the stated timeline of project completion by December 2016.
The government of Japan will provide a special economic partnership loan of 679b
yen to finance construction of the western corridor and procurement of locomotives.
The loan will be extended on soft terms for 40 years with a moratorium of 10 years.
The remaining cost will be borne by the Ministry of Railways in the form of equity to
DFCC. The first tranche of the loan for 90b yen for construction between Rewari
and Vadodara has been signed. Another 274b yen funding for Phase II (Vadodara-
JNPT) is under negotiation and expected to be finalized by March 2012.
For the eastern corridor, the section from Ludhiana to Mughalsarai will be funded by
a USD2.7b World Bank loan and the section from Mughalsarai to Sonnagar will be
funded by the government of India. Sonnagar to Dankuni will be on a public-privatepartnership
basis.
Project cost INR780b, packages to include civil/electrical contracts
DFCC's project cost had been originally envisaged at INR280b, as estimated by
RITES in 2006. This has gone up due to: (1) a change in alignment at few junctions,
(2) increase in commodity prices, execution timelines and (3) increase in interest
during construction (IDC, INR100b+) and thus, project cost has been revised to
INR780b.
Of this however, IDC is a soft cost (payable with debt, only once the project is
operational). Therefore, the funding is required for ~INR650b+.
DFCC indicated that the packages could be broadly divided into the length for both
the corridors and the scope of civil work would be ~60% (including laying tracks),
and signaling/electrical works will be ~30%. The rest is IDC ~10%.
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