Thursday, June 2, 2011

India Rail Freight Corridor Secures World Bank Funding

$975 Million Loan for Eastern DFC
Shipping News Feature

INDIA – Following problems with alleged corruption which we reported on last August the massive Dedicated Freight Corridor Corporation of India Limited (DFCCIL) project, which aims to totally regenerate India’s rail freight sector, received a substantial boost on Tuesday with the news that the World Bank had committed to loaning US$975 million to help finance the construction of the Eastern Dedicated Freight Corridor (EDFC) segment of the project.

The intention of the DFCCIL is to increase India’s railway transportation capacity by building high-capacity, higher-speed dedicated freight corridors along the “Golden Quadrilateral” – the four rail routes that connect Delhi, Mumbai, Chennai, and Kolkata. Currently, these routes account for just 16 percent of the railway network’s length, but carry more than 60 percent of India’s total rail freight.

These in turn will allow Indian Railways to free up capacity and better-serve the massive passenger market in this densely populated region.

Once completed the EDFC will ease congestion choking the railway system and reduce travel time for passenger trains on the arterial Ludhiana-Delhi-Mughal Sarai railway route, adding additional rail transport capacity, improving service quality and creating higher freight capacity.

The World Bank’s financing for the EDFC will cover a route length of 700 miles (1,130 kms) of the total corridor length of 1142 miles (1,839 kms). It will also 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.

“Implementing the DFC program will provide India the opportunity to create one of the world’s largest freight operations, adopting proven international technologies and approaches which can progressively be extended to other important freight routes throughout the network,” said Roberto Zagha, World Bank’s Country Director in India.

Augmenting its transport systems is a crucial element of India’s trillion-dollar infrastructure agenda for the next Five-Year Plan (XIIth Plan) which starts in 2012. Since the 1990s, road transport has advanced more rapidly than the railways, and now accounts for about 65 percent of the freight market , which is considered unsustainable by the Indian Government and experts.

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. Unlike the existing rail network, which runs on a combination of diesel and electrical locomotives, the proposed DFC corridor will operate entirely through electric locomotives, thereby further reducing GHG emissions.

A Carbon Footprint Analysis conducted by DFCCIL for the Eastern DFC Project shows the corridor is expected to cause 2.25 times less carbon emissions when compared to a scenario where the freight is transported through a non-DFC network of the Indian Railways. It also 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 millions of GHG emissions in the absence of EDFC – a 55 percent reduction.

“Studies show that DFC will enable the Indian Railways to reduce GHG emissions on these routes by over 64 percent - an actual reduction from 12.3 million tons of GHGs to 4.3 million tons of GHGs,” said Ben L. J. Eijbergen, Lead Transport Specialist and Task Team Leader for the Project

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