World Bank approves $650 Mil (INR 4135 Crore) Loan for 1100 Mile Kolkata-Ludhiana Dedicated Freight Corridor

World Bank approves $650 Mil (INR 4135 Crore) Loan for 1100 Mile Kolkata-Ludhiana Dedicated Freight Corridor

EDFC-3 Project approved today by World Bank, will build the 401 km Ludhiana-Khurja section in Uttar Pradesh, Haryana and Punjab. The Project will help increase the capacity of these freight-only lines by raising the axle-load limit from 22.9 to 25 tons and enable speeds of up to 100 km/hr. It will also help develop the institutional capacity of the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) to build and maintain the DFC infrastructure network

New Delhi: The World Bank Board approved a $650 million or Rs. 4,135 crore loan towards the third loan for a huge freight rail corridor i.e. Eastern Dedicated Freight Corridor (a freight-only rail line that will span 1,100 miles) to help faster and more efficient movement of raw materials and finished goods between the northern and eastern parts of India.

Construction of the Eastern Dedicated Freight Corridor will help speed up the carrying of goods between Ludhiana in Punjab and Kolkata in the East, and is part of a series of new freight lines the World Bank says India needs to ease congestion on its network.

“The Indian Railways urgently needs to add freight routes to meet the growing freight traffic in India, which is projected to increase more than 7 per cent annually,” Ben LJ Eijbergen, the Task Team Leader for the project, said in a statement.

The loan is the third from the World Bank to help fund the freight corridor.

Indian Railways are among the most extensive in the world but have struggled to expand to keep up with demand. This has hit freight carriers hard as they are forced to carry their goods by road, which is far more inefficient and expensive, to make room for passenger trains on the congested lines. The railway’s share of freight has fallen from 90 percent of cargo in 1950 to about one-third today.

The Eastern Corridor is 1,840 km long and extends from Ludhiana to Kolkata. The World Bank is supporting the Eastern Dedicated Freight Corridor (EDFC) as a series of projects in which the three sections with a total route length of 1,146 km will be delivered sequentially, but with considerable overlap in their construction schedules.

EDFC 3, approved today, will build the 401 km Ludhiana-Khurja section in Uttar Pradesh, Haryana and Punjab. The Project will help increase the capacity of these freight-only lines by raising the axle-load limit from 22.9 to 25 tons and enable speeds of up to 100 km/hr. It will also help develop the institutional capacity of the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) to build and maintain the DFC infrastructure network.

“Implementing the Dedicated Freight Corridor program will provide India the opportunity to create one of the world’s largest freight operations. The corridor, which will pass through states like Uttar Pradesh and Bihar, will benefit from the new rail infrastructure, bringing jobs and much-needed development to some of India’s poorest regions,” said Onno Ruhl, World Bank Country Director in India. “Moving freight from road to rail will reduce the carbon footprint of freight by 2.25 times,” he added.

The first loan of $975 million for the 343 km Khurja-Kanpur section in the EDFC program was approved by the World Bank Board in May 2011 and is already under implementation. So far it has awarded contracts worth $700 million for this section. Compensation has been awarded for about 95 percent of the 1,410 ha of land being acquired from 29,253 affected farmers for EDFC1 (Khurja-Kanpur section). The second loan of $1.1 billion for EDFC2 which covers 402 km from Kanpur to Mughal Sarai was approved by the World Bank in April 2014. Under EDFC2, civil works contract for about $800 million has been awarded and contracts worth about $240 million, for establishing rail systems, are under procurement.

The EDFC is part of India’s first Dedicated Freight Corridor (DFC) initiative – being built on two main routes – the Western and the Eastern Corridors. These corridors will help India make a quantum leap in increasing the railways’ transportation capacity by building high-capacity, higher-speed dedicated freight corridors along the Golden Quadrilateral. Currently, the rail routes that form a Golden Quadrilateral connecting Delhi, Mumbai, Chennai and Kolkata, account for 16 percent of the railway network’s route length, but carry more than 60 percent of India’s total rail freight.

Augmenting its transport systems is a crucial element of India’s trillion-dollar infrastructure agenda. Since the 1990s, road transport has advanced more rapidly than the railways, and now accounts for about 65 percent of the freight market and 90 percent of the passenger market in India.

“The Indian Railways urgently needs to add freight routes to meet the growing freight traffic in India, which is projected to increase more than 7 percent annually. These freight lines will wholly transform the capacity, productivity, and service performance of India’s busiest rail freight corridors. At completion, it will be able to more than double its capacity to carry freight, with faster transit times, being more reliable and at lower cost,” said Ben L. J. Eijbergen, Lead Transport Specialist and Task Team Leader for the Project

Significant Green Impact: In addition to the efficiency improvement and other operational benefits, the Project is expected to bring in significant reductions of Green House Gas (GHG) emissions.

A Green House Gas Emission Analysis conducted by DFCCIL for the Eastern DFC Project shows that the Eastern corridor is expected to generate about 10.48 million tons of GHG emissions up to 2041-42, as against 23.29 million of GHG emissions in the absence of EDFC – a 55 percent reduction of GHG emissions.

Economic opportunities are also being explored along the freight corridor. The government is planning to set up 7 integrated manufacturing clusters using EDFC as the backbone. These clusters will be set up with an investment of about $1 billion on either side of EDFC.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 7-year grace period, and a maturity of 22 years.

Prime Minister Narendra Modi’s government, banking on big investment in infrastructure to boost the economy, approved a $137 billion or Rs.8.71 lakh crore investment plan for the railways in February.