MoU signed for railway line to Krishnapatnam port

Rs588cr project to provide logistic advantage to iron ore exporters in Andhra

A memorandum of understanding (MoU) for the construction of the much-awaited 113-kilometre Obulavaripalle-Krishnapatnam railway line was signed here on Tuesday.

Once the project is completed, the new rail line is expected to provide a logistic advantage to Krishnapatnam port, especially for iron ore exporters and coal importers over its potential competitor Ennore port in Tamil Nadu.

The project will be executed by the Krishnapatnam Rail Road Company Limited, a special purpose company which has already been incorporated for the purpose.

The company is jointly promoted by the Rail Vikas Nigam Limited (RVNL), Krishnapatnam Port Company Limited (KPCL) and the state government, with an equity ratio participation of 30:30:13 per cent respectively.

The total equity component is Rs 266 crore at a debt-equity ratio of 1:1. The remaining 27 per cent equity is expected to be raised by iron ore exporters who are strategic partners of the port company, while the Government of India has agreed to provide Rs 50 crore towards the viability gap fund for the Rs 588-crore rail project.

JP Shukla, managing director of RVNL, Venkaiah Chowdary Nannapaneni, chairman of KPCL, and Binoy Kumar, secretary, transport, roads & buildings (T, R&B) department, Government of Andhra Pradesh, signed the agreement in the presence of state transport, roads and buildings minister Jakkampudi Rammohan Rao.

Speaking on this occasion, Shukla said that the project would be taken on a fast-track mode. He urged the state government to ensure the land acquisition required for the project at the earliest. The government is providing the land towards its equity share in the project.

Nannapaneni said that the new railway line promises to make Indian exporters and importers from the region more competitive in the international markets and make interior areas of Rayalaseema region in the state accessible to the coastal areas.

The area to be benefited by this rail line would extend right up to the Bellary-Hospet sector of Karnataka, apart from southern Andhra Pradesh, he said.

The Obulavaripalle-Krishnapatnam railway line project is expected to be completed by June 2008 coinciding the completion of Krishnapatnam port's development work. Infrastructure major Navayuga Engineering Limited had recently acquired 74 per cent equity in the Krishnapatnam Port Company Limited.

The traffic potential at Krishnapatnam port is estimated at 8.6 million tonnes by 2010 and 14.1 million tonnes by 2016.