K-Rail to raise ₹33,700 crore from external funding agencies as loan for semi-high speed rail corridor.
THIRUVANANTHAPURAM: Kerala Rail Development Corporation Ltd. (K-Rail), the joint venture of Railways and the State, has initiated steps to mobilise ₹33,700 crore from international financial institutions as loan for the Kochuveli-Kasaragod semi-high speed rail corridor, Silver Line, estimated to cost ₹63,941 crore.
The Kerala government on Wednesday said it has approved an ambitious ₹66,000 cr semi-high speed rail project, called ‘Silver Line’, seen as a game-changer project to recast infrastructure and economic development. The long-pending project could cut down travel time from its northern tip, Kasargod district, to the southernmost district Thiruvananthapuram, to just 4 hours from 12 hours using the existing Indian Railway trains.
The State has approached the Asian Development Bank (ADB), Japan International Cooperation Agency (JICA), German Development Bank KfW, and Asian Infrastructure Investment Bank (AIIB) for mobilising the loan. The project is the biggest one the communist government has announced in its term, nearing end next year, and is brought to life a decade long discussions about it in the state. In the backdrop of financial fallout for states after covid-19 pandemic, the development also assumes significance that it signals Kerala is going for expansionary spending, in sharp contrast with several other state governments and the central government have tightened their purse on spending. Kerala Chief Minister Pinarayi Vijayan said through a Facebook post that the cabinet has approved a detailed project report and alignment for the project. The state will approach financial institutions and nationalised banks to raise funds for the project’s land procurement, he said. Loans will be also made through Japan International Corporation Agency (JICA), German state-owned bank KfW Group, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), he said.
The detailed project report (DPR) prepared by the Paris-based consulting firm Systra, the general consultant of K-Rail, has been forwarded to these institutions.
K-Rail has also given the proposals and feasibility report to these institutions through the Department of Economic Affairs.
The Cabinet had given its the nod for K-Rail to hold consultations with the ADB, JICA, KfW, and AIIB for securing the loan. Already, Railways had given “in-principle approval” for pre-investment activities for the 529.45-km corridor.
“As the government order had been received, the DPR and alignment of Silver Line will be forwarded to the Ministry of Railways on Monday for further clearances,” Managing Director, K-Rail, V. Ajith Kumar said.
The cash-strapped Railways will have to provide ₹3,125 crore (4.89%) of the estimated cost and the State ₹3,253 crore (5.09%). Private equity of 6.65% is expected to mobilise ₹4,252 crore. The State will also have to bear the cost of acquiring 1,226.45 ha of land for laying the line in 11 districts, estimated at ₹11,837 crore (18.51%).
The subordinated debt (GST) of the Centre will come to ₹3,189 crore (4.99%) and that of the State ₹2,896 crore, which will be 4.53% of the estimated project cost.
Floating green bonds is also under consideration. Green cess and value capture financing, a mode of public financing that acts as a tax collection mechanism and aims to recover part or full of the value that public infrastructure generates for private landowners, are the other options.
Private equity, especially from Non-Resident Keralties, is being looked into based on the inflow of investments that has poured in for the Cochin and Kannur airports.
“The path will be built in a 531 km distance between Thiruvananthapuram and Kasargod. Thr trains could train would run as faster as 180-200 kilometers per hour. One could reach Ernakulam in one and half hours (which takes five hours now) and Kasargod in four hours (which takes 12 hours now) from Thiruvananthapuram. There will be nine bogies, which can carry 645 passengers at a time. There will be two kind of classes, business and standard. We expect the project to finish by 2025. Including Kochi airport, there will be 11 stations,” said Vijayan.
Kerala Rail Development Corporation (KRDCL), the implementing agency for double-line project, had recently obtained permission for the proposal to the Ministry of Railways for building third and fourth lines between Thiruvananthapuram and Kasaragod. According to the proposal, it will be a joint venture of the Kerala government and the Ministry of Railways. During implementation, the project is expected to create 50,000 jobs and employment for 11,000 on completion. The trains will be passing through 11 of the total 14 districts.