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The first high-speed rail corridor is likely to be funded through soft loans from key international funding agencies such as Japan International Cooperation Agency (JICA) and World Bank. The government prefers soft loans to private funding under the public-private partnership model due to high-risk and uncertainty over profits involved in the project, which might deter private players from participating.
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According to senior Railway officials, these funding agencies have also expressed interest to finance the first high-speed rail corridor. The 534-km long Mumbai-Ahmedabad stretch is likely to be the first high-speed rail corridor and is expected to have trains running at speed of up to 350 km per hour. JICA is undertaking a feasibility study of the corridor project.The vast pool of research and knowledge available on the Mumbai-Ahmedabad corridor (earlier a RITES study was also conducted for the corridor) and the high gross domestic product of Maharashtra and Gujarat, which can offer traffic with higher spending capacity make the corridor a preferred option.
Senior Railway officials involved with the project said the government thinks that it was not feasible to explore PPP for the first high-speed rail project. “We do not think that private parties will be interested. This is the first project with high risks and first of its kind in the country. The first project has to be done by the government. Once it is successful, private players will be interested for the other projects,” said a senior Railway official on condition of anonymity. The estimated project cost is about Rs 54,000 crore with per km cost of Rs 100 crore.
JICA already has investments in key projects like for the Western arm of the Dedicated Freight Corridor Project and has also funded the Delhi Metro. Senior JICA officials said the agency was interested to fund the high-speed rail projects in India. “We are keen to fund the first high-speed rail project and the feasibility study for Mumbai-Ahmedabad should be completed by middle of the next year. The cost, funding and viability aspects of the project are under examination,” said a senior JICA official who did not want to be named.
JICA is exploring the option to fund the project under Special Terms of Economic Partnership (STEP) loan; a similar loan model is used for the DFCC project. Under this option, a soft loan is availed at cheap rates for a period of about 40 years with a moratorium of ten years. The contractor for the project needs to be a Japanese company in a joint venture with the Indian counterpart.
Other than JICA, government sources said, even World Bank has expressed its interest to fund the high-speed project. World Bank has similarly funded high-speed rail projects, including the first such project in Japan in 1964. However, in an email response, World Bank said as of now it has not received a request from the Centre for financing high-speed rail projects. “If we receive such a request, we shall consider,” said Atul Agarwal, senior transport specialist, World Bank.
Senior Railway officials argue that the reason to go for public funding is not just high cost but other hurdles like land acquisition, transfer of new technology etc. Land acquisition is going to be a big issue which will take about three years to be completed once the process starts. Further, the technology and engineering will be entirely new. “We have a lot of options to transfer technology from countries such as France, Japan, and Spain. Japan has a great record of no accidents since 1964, it is likely to be our preferred choice for the transfer of technology,” said senior Railway official on condition of anonymity.
According to experts, once the land acquisition is completed, the construction will take about five-seven years. It might take up to 10 years for the first high-speed corridor to be operational.
