The ambitious Dedicated Freight Corridor project has taken of with projects on eastern and western corridors being awarded. These corridors will be first of their kind in the world. In an interview, Shri R.K.Gupta, Managing Director, Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) gives an update on the project and how the project would impact lives and business in India. Excerpts of the interview.
What is the current status of the Freight Corridors? Is the work on schedule?
There work in two corridors is in full swing. The Eastern Corridor between Ludhiana to Dankuni is partly funded by the World Bank. Western corridor is between Dadri to JN Port Mumbai is completely funded by Japan International Corporation Agency (JICA). The Phase 1 of both corridors will be completed in 2017 and Phase 2 of both corridors by 2018. For Phase 3 loan has not been sanctioned, next year it will get through hopefully and the expected completion date will be 2019. These are the general timelines that we have set.
What are the recent projects awarded/bid for?
On Western Corridor-Rewari-Palanpur-contract has been awarded June last year to L&T and Sozitz. It is one of the most expensive contracts costing Rs 6700 crore. And for the next section, Palanpur-Vadodara , 300km-bids are due for submission on 30th July. Phase II also we have started the process but the loan agreement was signed in March. The section from Vadodara to Vaitarna (Phase 2-Western Corridor) is almost 320 kms-The pre-qualification has been declared, 4 companies have pre-qualified-JV of L&T and Sojitz, Sujita and IVRCL, IMJV-Marudeni (Japan), Tata, KEC, Gamon, GMR, Express Freight Consortium of Mitsui and IRCON. L&T Sozitz JV, On Eastern Corridor contract was awarded to Tata & Aldesa for part of Phase 1. Kanpur- Mugalsarai we are negotiating with the World Bank for the second tranche of loan. We already opened the PQ on 5th of July. There has been tremendous response.24 people participated. We are evaluating and the process may take one and half to two months. As for the land we have already acquired 89% of the land.
So far, the land acquisition has been smooth for DFCCIL. How is your process any different from other land acquisitions happening across the country? How are the terms different and how does this impact the land user?
Land Acquisition is something that we are doing differently. We are not doing it under the old Land Acquisition Act, 1894 but under Railway Amendment Act, 2008. These two acts are totally different. In the1894 Act, the entire process is done by the State Government. Here we are using a hybrid model. The project has to be declared as a special project under the power of a Central Legislation. The land acquisition officer can be from Railways but at all places we have taken State Government revenue officers. We also have separate entitlement metrics. We are going for 60 % solatium and they are given 30% solatium and there are other relief measures which we have adopted from NRRP 2007-Natioanl Relief and Rehabilitation Policy-which is yet to be passed by the Parliament but the provisions of it were incorporated in 2008. Funding agencies are also keeping a watch on it. The monitoring agencies have reported that overall the people are satisfied with the procedure. It’s not my report but an independent third party report in which we are not involved at any stage.
Apart from enhancing the freight loading capacity what other benefits does this project brings with it.
Currently we can carry 5000 tonnes in one train; our capacity in the future would be 13-14,000 tonnes with an average speed of 65-70km/hr compared to current speed of 25Km/hr. The trains would be completely electrified so we could also go for carbon trading in the future. We expect to save 457 million tonnes of Carbons over the period of thirty years. Industrial hotspots would come up during the construction of these lines. Delhi Mumbai Industrial Corridor has already identified potential areas for industrial development along the Western Corridor. In total, 300 Km strip on either side of the corridor has been identified. Seven Zones have been identified where prospects of development of mega industries are being looked at. On Eastern Corridor recently inter-ministerial group has been formed by the PM India for development of similar corridor. Sanand is coming up as a very big junction. Tata Nano and Maruti are planning to build plants.
According to the terms of contract with JICA, the lead company in projects on Western corridor has to be a Japanese company. Does this give us enough competition to pick from?
We do not get many options to pick from. But if they are giving dirt cheap loan with 0.2% interest, 40 years term, 10 years moratorium. They would have their pound of flesh. We had huge response on the Eastern Corridor and we had open competition. So the first bidding also in many ways set a standard for the Western Corridor which happened later. Under the contract 50 % of the equipment and services on the western corridor have to be from Japan, including the lead company in the project. We are buying 200 electric locomotives from Japan which is a part of the contract. But we had limited response because not many Japanese companies had shown interest. Only Japanese trading companies came forward. The work would eventually be done by Indian company or some international company in collaboration with the Japanese. They would just be giving their management expertise or the material equipments to assist the process. But yes, there is inadequate competition. And that is why we delayed the opening of bids for Western Corridor.
How will the project impact the life on an ordinary citizen?
Faster delivery impacts costs. If the logistics cost of the companies will come down, it will ease the overall rate of commodities. And if I can have refrigerated wagons, a fish from Kolkata will be available to you as fresh as you can imagine. It will be cheap. It will boost industrial sector. It makes the life cheaper and comfortable by lowering transportation costs.
According to terms of the contract with JICA, the lead firm in projects on the western corridor has to be Japanese. Does this give us enough competition to pick from?
We do not get many options to pick from. But if they are giving a dirt- cheap loan, with 0.2 per cent interest, a term of 40 years and a 10-year moratorium on payment, they would have their pound of flesh. We had huge response on the eastern corridor and we had open competition. The first bidding also, in many ways, set a standard for the western corridor, which happened later.
Under the contract, half the equipment and services on the western corridor have to be from Japan, including the lead company in the project. We are buying 200 electric locomotives from Japan, which is a part of the contract. But we had limited response because not many Japanese firms had shown interest. Only Japanese trading companies came forward.
The work would eventually be done by an Indian company or some international company in collaboration with the Japanese. They would just be giving their management expertise or the material equipment to assist the process. But, yes, there is inadequate competition. It is why we delayed the opening of bids for the western corridor.