Dedicated freight corridors cost revision: Railways to move Cabinet soon

Eastern, western freight corridors have seen 54% cost escalation

The Indian Railways will soon seek the Union Cabinet’s approval to revise the cost estimate of its ambitious eastern and western dedicated freight corridors (DFCs). These projects have seen a combined 54 per cent escalation in cost, observed government officials.

The Revised Estimates (RE) are currently being reviewed by Minister of Railways Ashwini Vaishnaw, after which they will be sent to the Cabinet for approval, said a senior official.

In 2015, the Cabinet had approved the revised cost estimate of the two freight corridors at Rs 81,459 crore. This figure has now risen to Rs 1.24 trillion as of end-2021-22 (FY22), according to a project report by the Dedicated Freight Corridor Corporation of India (DFCCIL) — a state-owned implementing agency for the projects. These costs include Rs 21,846 crore for land acquisition and Rs 1.02 trillion in construction and other costs.

Freight corridors are special tracks made for goods trains, aimed at decongesting the rail network and ensuring quicker movement of goods.

The eastern DFC (1,875 route kilometre, or rkm) starting from Sahnewal near Ludhiana (Punjab) will pass through Punjab, Haryana, Uttar Pradesh (UP), Bihar, and Jharkhand to terminate at Dankuni in West Bengal.

The western corridor (1,506 rkm) connecting Dadri in UP to Jawaharlal Nehru Port Trust in Mumbai will traverse through UP, Haryana, Rajasthan, Gujarat, and Maharashtra.

While the DFC project was approved more than 15 years ago, it faced several hurdles related to land acquisitions, delay in awarding contracts, appointing consultants, loan approvals, and more recently the outbreak of the Covid-19 pandemic, resulting in delay in implementation of the project and cost escalation. Earlier, the deadline for project completion was 2017-18.

“The need to approach the Cabinet on revised costs usually comes when only 10-15 per cent of the existing funds are remaining. We have not reached that situation, as awarding is steadily happening on the DFC front. However, we have used up a sizeable portion of the available funds. The proposal to approve the revised costs should be on the Cabinet table very soon,” said the official.

According to a November report by DFCCIL, financial progress on the two projects stood at 78 per cent, with contract awarding at over Rs 57,000 crore.

The deadline for the completion of the eastern and western DFCs was June this year, but delays in land acquisition and pandemic-induced slowdown appear to have significantly pushed this deadline.

As of 2021, 1,110 km of the planned 2,843 km have been constructed on the eastern and western DFCs combined.

“While pandemic-induced price rise was definitely a factor behind escalation in costs, it wasn’t the biggest. As delays continued (over a decade), the cost was naturally bound to go up. The RE of Rs 1.24 trillion given in November would have reached around Rs 1.3 trillion,” added the official.

As of November, DFCCIL has achieved 100 per cent land acquisition for the two DFCs being undertaken solely by the government. A 538-km section between Dankuni and Sonnagar is being developed in public-private partnership mode.

“There are four patches affecting a length of 0.94 km in eastern DFC and five patches affecting a length of 6.63 km in western DFC due to various land issues,” DFCCIL said in a project status report in November.

According to the government’s estimates in 2015, the eastern DFC is expected to carry 153 million tonnes (mt) of traffic in FY22, which will increase to 251 mt in 2036-37 (FY37).

The western DFC is expected to carry 161 mt of traffic in FY22, which will increase to 284 mt in FY37.