Indian Railways to introduce BOT model in dedicated freight corridors

Anushka Khare Posted on: 2021-02-17 09:56:00 Viewer: 3,821 Comments: 0 Country: India City: New Delhi

Indian Railways to introduce BOT model in dedicated freight corridors

New Delhi, India (Urban Transport News): Indian Railways is planning to introduce the build-operate-transfer (BOT) model for the construction of dedicated freight corridors (DFCs) by engaging private players. It will be first experimented in a stretch of the Eastern Dedicated Freight Corridor (EDFC) between Sonnagar in Bihar and Dankuni in West Bengal.

The 538-km Eastern Dedicated Freight Corridor (EDFC) will stretch from Ludhiana in Punjab to Dankuni. Key private players like GMR, Tata Projects, L&T and DP World are expected to be keen on the Design, Build, Finance, Maintenance and Transfer (DBFMT), which is a type of BOT model. The estimated cost of EDFC is Rs 15,000 crore.

This model will also be applied in the three new DFCs that were announced in the Union Budget 2021-22 by Finance Minister Smt. Nirmala Seetharaman. The three projects are East-Coast Corridor, East-West Sub Corridor, and North-South Corridor, which may attract investments to the tune of Rs 2.17 lakh crore.

“It is for the first time the BOT model is being tested in the Indian Railways. Private players will be involved in everything, except operations,” said Ravindra Kumar Jain, Managing Director of the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL), reported Money Control.

Normally, a private player builds a project, operates it, and later transfers it to the original owner after a certain period of time under the existing BOT model being exercised in Highway projects. However, RK Jain said that based on the current DBFMT model, the private player will be even exposed to traffic risk and will be in charge of maintenance, too.

He further informed that this public-private partnership (PPP) model has got its nod from the Railway Board and is currently under the consideration of the Indian Think Tank NITI Aayog.

Once approved by NITI Aayog, DFCCIL will float a tender for this. One of the plans DFCCIL is considering is assured traffic of 80 percent to private players.

It is pertinent to mention here that the Viramgam-Mahesana Gauge Conversion Project, executed by DS Construction in 2002, is believed by many to be the first railway BOT project in India, it cannot be considered as a BOT model in the real sense as no risk was involved for the company.

Jain said that it was more a financing model, where the company had invested some amount and we returned it in an equivalent annuity. The Sonnagar to Dankuni stretch will be taken up in two phases – the 282.22 km from Dankuni to Gomoh as Phase-I and the 256.58 km from Gomoh to Sonnagar as Phase-II.

Presently, the 1,192-km Ludhiana to Mughalsarai stretch of the EDFC is being funded by the World Bank and the WDFC is partly funded through a loan from the Japan International Cooperation Agency (JICA).

The Eastern and Western dedicated freight corridors are expected to be completed by June 2022.





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