Eastern DFC set to attract private players for development of the project through PPP model

Post By : Karvi Rana
Post Date : September 25, 2021
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In the first phase of development of the Eastern Dedicated Freight Corridor (EDFC), the government has decided to take up the development of the Sonnagar (Bihar) and New Andal (West Bengal) stretch rather than laying the rail corridor up to Dankuni.

As per sources in the Dedicated Freight Corridor Corporation (DFCC), there is 95% of land availability with them for the 374 km stretch between Sonnagar and New Andal and hence it can be bid out quickly. For the remaining stretch, they have hardly 55 per cent land under their possession.

Since the beginning of the Dedicated Freight Corridor project, the government decided to implement these two stretches up to Dankuni on public-private partnership (PPP) mode.

Managing Director of DFCC R K Jain said that the agency will develop the first stretch under a new PPP model, which will entail an investment of around INR 12,000 crore.

“We have taken the decision after holding a few rounds of interaction with the private players. They were apprehensive about the traffic and the revenue they would get during the concession period of 30 years. So we will go for the new model where the investor will have no risk of revenue and construction,” Jain added.

The new model will have a total contract period of 35 years, which includes five years as a construction period.

DFCC has proposed to put 25% of the project cost during the construction period. The 95% land will be provided during the first year of construction and the rest will be handed over the next year. “We will be responsible for utility shifting,” said Jain.

For the said contract period, the private player will be responsible for the design, finance (for 75% of project cost), build, operation and maintenance of the stretch which will then be transferred to the DFCC.

“We will run the trains and so the private player won’t have to be worried about the freight movement and revenue. The private player will quote the annuity or installment for the maintenance and operation period for 30 years post-construction. The payment of annuity will be linked to its performance and if the performance isn’t as per the contract norm, it will get less annuity. Since it will be responsible for operation and maintenance of all the infrastructure on this stretch, the quality of work would be better,” Jain said.

The section is expected to serve major powerhouses, industrial corridors and MMLPs (multi-modal logistics parks) in Haryana, Punjab, Delhi and Uttar Pradesh. Increasing trends in finished steel consumption and production would drive the growth of steel traffic on the route.

The stakeholders meeting for the DFC which took place on 23rd September through video conferencing and in-person mode witnessed the participation of over 40 Indian and multi-national companies (MNCs), financial institutions, banks, and consultancy firms.  

The firms included multilateral financial organisations like IFC, financial organisations like National Investment and Infrastructure Fund, Edelweiss Asset Reconstruction Company, Indian companies like Tata Projects, Adani Group, L&T, GMR Group, GR Infra, Kalpataru Power Transmission, Megha Engineering and Infrastructures, MNCs like Siemens, ABB Power Products and Systems India, Alstom, Sojitz-India, KEC International.

Furthermore, with an aim to attract more traffic and achieve a targeted rail share of freight, DFCCIL has plans to develop MMLPs, sidings and feeder routes for last-mile connectivity along the section alignment.

The tremendous social benefit will accrue to the population in the catchment area who are engaged in agriculture with a substantial population being small traders, artisans or those employed in industrial/commercial establishments. The implementation of the project will lead to new employment opportunities both during the construction and post-construction phases.

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