Government approves revised cost of eastern and western DFC

The government on Wednesday approved the revised cost estimate of the eastern and western dedicated freight corridor (DFC) projects at Rs.81,459 crore.

The revised cost estimate for the eastern and western DFC was approved by the cabinet committee on economic affairs (CCEA) at a meeting here.

According to the CCEA, the project completion period has been extended from December 31, 2014 to December 31, 2017.

The revised estimate break-up pegs construction cost at Rs.73,392 crore. Land acquisition is budgeted at Rs.8,067 crore.

The CCEA said that out of the total requirement, Rs.76,143 crore will be needed during project construction.

The government said the interest accumulated on the project funding (Rs.76,143 crore) during the construction phase would amount to Rs.5,316 crore for the western DFC.

This interest payment, said the CCEA, will be paid by the railways and finance ministry, after a moratorium period of 10 years.

The railway ministry will also infuse an equity of Rs.23,796 crore in the project.

The majority part of the funding worth Rs.52,347 crore would be taken as debt from JICA (Japan International Cooperation Agency) and the World Bank.

The eastern and western DFC pass through many states including Punjab, Haryana, Uttar Pradesh, Bihar, Jharkhand, West Bengal, Maharashtra, Gujarat and Rajasthan.

"The eastern and western DFC will add substantial capacity, reducing unit cost of transportation and would provide efficient services to benefit power houses, mines, ports, trade and industry and the container sector," the CCEA said in a statement.

"It will benefit the environment as traffic from road will move to rail resulting in reduction in 457 million tonnes of carbon dioxide over a 30 year period," the statement said.

It is expected that the eastern DFC will carry 153 million tonnes of traffic in 2021-22, which will increase to 251 million tonnes in 2036-37. The western DFC is expected to ferry 161 million tonnes of traffic in 2021-22, which will go up to 284 million tonnes in 2036-37.

Both JICA and the World Bank are the major lenders for the project. The World Bank has granted a loan of $2.725 billion for the eastern DFC.

For the Western DFC, JICA has agreed to lend 550 billion Yen ($4.43 billion).

"The project has achieved significant progress. Over 84 percent of land has been acquired. Civil construction contracts for about 1,526 km on the two corridors and 54 bridges on the western DFC have been awarded," the statement pointed.

"The systems works for signalling and electrification packages and the balance civil works are also at an advanced stage of tendering."

The CCEA in February 2008 gave approval for implementation of the eastern and western DFC projects with a completion cost of about Rs.80,000 crore by 2017-2018.

The project is being funded by a combination of debt from bilateral, multilateral agencies, equity from the railways and through public private partnership (PPP).

The project is being undertaken by the Dedicated Freight Corridor Corporation of India (DFCC).