Govt in discussions with World Bank and ADB for a funding mechanism to fast track Rail projects

New Delhi; With capacity expansion a priority for Indian Railways (IR), the government is in discussion with the World Bank and Asian Development Bank (ADB) for a funding mechanism to fast track railway projects.

IR, senior officials told, could form a company or float a fund. “Discussion is on but we aim to get the funds flowing this year,” said one.

Last week, Finance Minister Arun Jaitley had said India’s partnership with ADB should move to a higher level. At the first business session of its 48th annual meet, at Baku in Azerbaijan, he sought its “deeper engagement” for developing smart cities, industrial corridors and railways, as part of the government’s flagship initiatives such as ‘Make In India’ and ‘Skill India’.IR says it has a shelf of pending projects originally estimated to cost Rs 491,510 crore. Of these, priorities such as doubling, new lines, gauge conversion, traffic facilities and electrification is estimated at Rs 208,054 crore. Officials said such prioritization can ensure a sustained flow of funds and focused attention given for completion. These will have a direct bearing on line capacity, ensuring higher earning and asset utilisation.

IR has identified 77 projects worth around Rs 1 lakh crore for being taken up in the first instance. Most of these are line doubling projects, where utilisation is more than 100 per cent of capacity. “One round of meeting with railway public sector units (PSUs) has already happened,” said an official.

Suresh Prabhu, the minister, had in his budget speech this February said IR would spend Rs 8.5 lakh crore over five years. “Around Rs 2.5 lakh crore of this would be raised as debt. This includes rolling stock financing through IRFC (the rail finance corporation). As the ministry cannot borrow, we are arranging debt either through IRFC or PSUs,” the official said. Lending from multilateral agencies would come through gross budgetary support from the ministry of finance, he added.Freight corridor

The World Bank, it has already been decided, is to fund a stretch of the 1,800-km eastern arm of the Dedicated Freight Corridor (DFC) project. The money is being planned in three tranches, for the stretches of Khurja-Kanpur, Kanpur-Mughalsarai and Khurja-Ludhiana.

Financing for the 725 km section between Ludhiana and Mughalsarai will be undertaken over three phases by the Bank. The first tranche of this loan, aggregating to $975 million (Rs 6,250 crore), has been signed.Another multilateral lending agency, Japan International Cooperation Agency (Jica), is funding the western corridor of DFC.

It is providing ¥677 billion (Rs 36,200 crore) as a loan to finance both construction and procurement of locomotives, on soft terms, for 40 years, with a payment moratorium of 10 years. The agreement for a first tranche of ¥90.2 bn for construction between Rewari and Vadodara and funding for Phase-II (Vadodara-Navi Mumbai port) for ¥266 bn has been signed.