DFCC’s Eastern corridor plan finally takes off

Soon to award contract for Western Corridor, some progress finally on the Eastern Corridor, but still a long way to go.  The Dedicated Freight Corridor Corporation which awarded the Khurja-Bhaupur section (343 km) on the Eastern Corridor to Tata-Aldesa consortium is likely to award the first two packages (625 km) on the Western Corridor, a senior company official said. The Eastern DFC is the first major contract awarded through an international competitive bidding process and involves the construction of a double track line, and 14 km of a single line – between Bhaupur and Khurja in Uttar Pradesh. This will be a Design-Build Lump sum contract and shall be executed within a four year time-frame. The total cost of the Eastern DFC project is around Rs 5,400 crore, that has been funded by the World Bank.   “Though the total cost of the project is Rs 5,400 crore, Tata Projects and Aldesa (Spain) consortium has received cash contract of Rs 3,300 crore and the remaining Rs 2,100 crore will be spend by DFCC on building up the necessary infrastructure such as signaling and rolling stocks,” said S Irfan, Business Head, Tata Projects.     He further added that 80 per cent of the land acquisition has already been completed and the remaining land will be acquired towards April end. However, he mentioned, “we will start the work on the Eastern DFC by March.        Win by Tata-Aldesa con-sortium in Eastern Corridor reflects stiff competition. The 343 km stretch was sliced in three sub-segments/lots and a bidder was allowed to bid for one/two or all three sub-segments, offering various discounts.  According to an analyst, the contract was won for a cumulative value of about Rs 3,300 crore, implying a per-km rate of about   Rs 10 crore /km for a double line. Prima facie, the bid seems a bit aggressive in light of   the next highest (L2) bidder (it was lower by 10-15 per cent in each of the three sub-segments).    Moreover, for the next package of the Western Corridor, where DFC has already received two bids, the analyst said,”Marubeni-Tata-KEC consortium will surely adds to the competition – making it tough for L&T.”    However, as per analysis of Kotak Securities, L&T may receive about two-thirds of the share of the total EPC contract this would imply an average EPC order size of Rs 2,000-2,100 crore   per package.    Meanwhile, though the progress looks positive, the project seems to be running with a 1-2 year lag especially the Western Corridor. DFCC officials expect the commissioning of the Western Corridor, in a phase- wise manner, to be started from March 2017. This is against the original target of completing the entire project by 2017. “So far, not a single order for civil works has been placed in the Western Corridor, though one is expected to be awarded,” a senior executive from the DFCC said. Moreover, the Eastern Corridor still seems to be less delayed, with the commissioning (in a phased manner) expected to start from December 2013. DFCC expects to complete the award process of most of the civil works contracts by December 2013. Meanwhile, DFCC has received bids for package I and II for Rewari-Phulera (283 km) and Phulera-Palanpur (342 km) of the Phase 1 of the Western Corridor in December 2012 and is likely to award them in the near future. Two bidders qualified for the packages are the consortium of Sojitz (Japan) and L&T and a consortium of Mitsui (Japan), Leighton and IRCON. For the third package Palanpur-Vadodara (305 km), Marubeni-Tata Projects- KEC – IVRCL – Simplex -Gammon consortium has been added to the list of qualified bidders taking the total to three. However, the Tata Projects management refused to share further details on the consortium for Palanpur-Vadodara stretch since it’s against company policy. The Dedicated Freight Corridor is an ambitious programme of the Ministry of Railways, Government of India, which involves the construction of two corridors, the eastern corridor from Ludhiana to Dankuni covering a length of 1,839 km and the western corridor from Dadri to Jawaharlal Nehru Port, Mumbai covering 1,499 km for promoting a seamless movement of rail freight traffic.   The Dedicated Freight Corridor has been designed for a 32.5 tonne axle load when compared to the current carriage tracks of 22.5 tonne axle load which is on par with the standard in America, Russia, and China. Dedicated freight network is a key infrastructure project for Indian railways as it will segregate the passenger network from freight network. The corridor will also increase the speed of freight trains upto 100 km per hour.