Two new freight corridors of railways to cost around Rs 1.23 trillion

After completion of the much-anticipated Eastern and Western Dedicated Freight Corridors (DFCs) by 2021, the Railways is likely to take up the East-West DFC (EWDFC) and East-Coast DFC (ECDFC), which are expected to be completed by 2027. 

According to a new project appreciation report by the Railways subsidiary RITES, these two projects alone are estimated to cost around Rs 1.23 trillion and may handle over 1,500 million tonne traffic by 2041-42. 

The project completion cost was estimated based on the current price till 2026-27 by considering 5 per cent annual inflation on construction cost. 

The Dedicated Corridor Corporation of India (DFCCIL) also suggested a debt to equity ratio of 3:1 for the projects. 

DFCCIL is a special purpose vehicle incorporated in 2006 for the implementation of railway freight corridors in India.

Based on the new plan, the EWDFC will be truncated and start from Sindi near Nagpur to Hijli near Kharagpur, covering 1152.18 km and equated length (total length including connections with the Railways network) of 1,260 km. 

A total of 23 junction stations, three future junctions and 13 crossing stations have been proposed in this network which is expected to be completed at a cost of around Rs 73,804 crore.

On the other hand, the ECDFC will start from Hijli to Kottavalasa near Vizianagaram in Andhra Pradesh. The total length of this corridor will be 750.91 km with an equated length of 830 km. This route will be having at least nine junction stations, one future junction and 11 crossing stations. The expected investment for ECDFC will be around Rs 49,199 crore.

Based on the RITES projection, the EWDFC may handle around 449.88 MT traffic by 2031-32 and 690.6 MT by 2041-42. On the other hand, ECDFC may handle 405.11 MT by 2031-32 and 861.02 MT by 2041-42. The report added that it has incorporated other components, including insurance, initial working capital and interest during construction, too, while factoring in the project cost. 

“A sensitivity analysis has also been carried out to examine the impact of increase in project costs by 20 per cent and decrease in project revenues by 20 per cent on financial internal rate of return (FIRR). Even in the worst scenario, the projects remain financially viable,” it says. Based on the existing line, FIRR for EWDFC will be coming to around 31 per cent and that of ECDFC may be around 37 per cent.  

Customers moving their cargo on DFCs will be able to get higher average speed compared to the existing railway routes. The average speed of freight trains on the existing Railways system is only around 24 km per hour, while in the DFCs it will about 60 kmph. 

With completion of the first two DFCs, the total traffic of the Railways will increase by at least 144 MT by 2022.