Approval of Revised Cost Estimate (RCE) of Eastern and Western Dedicated Freight Corridor Project

Narendra Modi
Shri Narendra Modi

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for the revised cost estimate of Rs. 81,459 crore for the Eastern and Western Dedicated Freight Corridor (DFC) Project, including land costs and financing plan. The revised cost estimate of Rs. 81,459 crore comprises of construction cost of Rs. 73,392 crore of the Eastern and Western DFC  (Eastern DFC – Rs. 26,674 crore and Western DFC- Rs. 46,178 crore).  The land acquisition cost will be Rs. 8,067 crore. This excludes the cost of the 534 kms Sonnagar- Dankuni section proposed to be implemented through the Public Private Partnership (PPP) route.

Out of the total requirement of Rs. 81,459 crore for the Eastern and Western DFC project, Rs. 76,143 crore funding will be required during project construction, as interest during construction of Rs. 5,316 crore for the Western DFC  would need to be paid by the Ministry of Railways to the Ministry of Finance, after the moratorium period of 10 years. Rs. 52,347 crore would flow from debt from JICA and World Bank. Equity requirement from the Ministry of Railways (including land) for the project is Rs. 23,796 crore.

The Eastern and Western DFC passes through the States of Punjab, Haryana, Uttar Pradesh, Bihar, Jharkhand, West Bengal, Maharashtra, Gujarat and Rajasthan.

The Eastern and Western DFC project will add substantial transportation capacity, help in reducing unit cost of transportation and would provide efficient transportation services to benefit power houses, mines, ports, trade and industry and the container sector. It will benefit the environment as traffic from road will move to rail resulting in reduction in 457 million tonnes of CO2 over a 30 year period. The Eastern DFC is expected to carry 153 million tonne of traffic in 2021-22, which will increase to 251 million tonne in 2036-37. The Western DFC is expected to carry 161 million tonnes of traffic in 2021-22, which will increase to 284 million tonnes in 2036-37.

For the Eastern DFC, the commitment of World Bank loan is for US $ 2.725 billion and the loan agreement for US $ 975 million to cover the first package of 343 km from Khurja to Kanpur was signed in October 2011. For the second package of 402 km from Kanpur to Mughalsarai, the loan of US $ 1100 million was signed in December 2014. For the third package covering the 447 km Dadri-Khurja-Ludhiana section, negotiations were finalised with World Bank for a loan of US$ 650 million.

For the Western DFC, the commitment for the Japan International Cooperation Agency (JICA) loan is for 550 billion Japanese Yen and the first tranche loan agreements of 230 billion Japanese Yen for both Phase-I and Phase-II, have been signed.

Background:

The Eastern DFC is planned to be implemented in parts; EDFC-1 of 343 km, from Khurja-Kanpur; EDFC-2 of 402 km, from Kanpur-Mughalsarai; EDFC-3 of 447 km from Ludhiana-Khurja-Dadri. The 126 km, Mughalsarai-Sonnagar has already been taken up for implementation with Government funds; and the 538 km, Sonnagar-Dankuni section will be implemented through PPP. The Western DFC is planned to be implemented in two phases. Phase-1 of 963 km, from Rewari-Vadodara and Phase-2 of 557 km, from Vadodara-Jawaharlal Nehru Port Trust (JNPT) and Rewari-Dadri. The completion of the Eastern and Western DFC is targeted in phases from 2017 to 2019.

The project has achieved significant progress. Over 84 percent of land has been acquired with land compensation award of over Rs. 6,900 crore declared according to the provisions of the Railway Amendment Act, 2008. Civil construction contracts and other contracts for about 1526 km on the two corridors and 54 bridges on the Western DFC have been awarded at a total value of over Rs. 20,000 crore. Contracts are being awarded on design build lump sum basis. The systems works for signaling and electrification packages and the balance civil works are also at an advanced stage of tendering. To proceed with project implementation and enter into commitments approval of the revised cost estimates would be essential.

Earlier, the CCEA in Feb, 2008, gave approval for implementation of the Eastern and Western DFC projects and so far, expenditure of over Rs. 13,000 crore has been made.

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