Railways rules out renegotiating loan for bullet train amid rising costs

Amidst growing concerns of cost escalation of the Mumbai-Ahmedabad bullet train project, the Railways on Friday said there was no renegotiation of its terms and conditions with the Japanese agency which is funding 81 per cent of the total project cost.

The high speed rail network is estimated to cost Rs 1.1 trillion including the purchase of 24 train sets, interest during construction and import duties.

The Japanese International Cooperation Agency (JICA) is funding 81 per cent of the total project cost, through a loan.

The National High Speed Rail Corporation Limited (NHSRCL), the implementing agency for the project has acquired 60 per cent land (about 77 per cent land in Gujarat, 80 per cent in Dadar Nagar Haveli and 22 per cent in Maharashtra) needed for the project which has a deadline of December 2023.

The NHSRCL, however, has had to contend with issues ranging from protests by landowners and rising cost of the project due to the widening gap between the Indian rupee and the Japanese yen leading to major rise in costs.

In an online media interaction, Railway Board Chairman VK Yadav agreed that there will be a rise in the cost of the project but denied that there was any renegotiation on the loan with JICA.

"Yes, there is cost escalation, but this is not the right time to review costs. That will be done when we finalise tenders. As in any project, we finalise the estimated cost based on historic cost. But the actual cost is known only when tenders are invited. That is the time when we come to know what the project cost is shaping up," he said.

Yadav said due to the Covid-19 situation the land acquisition process faced some delays and that by this financial year the process will be completed. He said the physical work on the project will begin after 90 per cent of the land has been acquired.

Tenders have also been invited for nine packages so far, he added.

"I want to confirm that there is no renegotiation as far as the terms and conditions of the loan is concerned," Yadav said.

"As far as cost escalation is concerned, in any project whatever the estimated cost may be, when the work is being executed and when work is completed there is bound to be some increase in the cost either due to cost escalation, due to inflation or due to change in design," he said.

Speaking at an event last week, Railway Minister Piyush Goyal had indicated that the financial aspect of the ambitious bullet train project between Mumbai and Ahmedabad was being reviewed as the post-Covid world will entail "a lot of tightening of the belt".

Speaking at the India Global Week, the minister, however, said the Railways was "committed to these projects" and "we are at the stage of finalising plans and costing" for them.

"Certainly Covid-19 has been a little bit of spanner in terms of the ambitions that we had around the bullet train project and we are relooking at all the projects in terms of the post-Covid world that will entail a lot of tightening of the belt, a lot of cost cutting and improving our efficiencies and aligning ourselves to how travel and transport will work in the after Covid world," Goyal had said in response to a question on the status of the ambitious project.

"I really think that it's going to be a before-Covid and after-Covid affair," he had said.

Sources say talks are underway with Japan to explore if Indian companies can take on some of the highly specialised engineering jobs, on the lines of 'Make in India', and to bring down the project cost.