New Delhi: The Indian Railways has circulated a cabinet note to ramp up four rail corridors at a cost of Rs 7,580 crore in resource-rich Odisha to ferry raw minerals like iron ore, bauxite and coal from pit heads to plants. With the internal rate of return (IRR) of all the four projects being higher than 14 per cent, they are eligible for funding from Life Insurance Corporation (LIC) with which the national transporter has tied up for a Rs 1.5 lakh crore funding line.
The four projects which involve doubling and laying of third and fourth lines are Jagdalpur-Koraput, Koraput-Singapur, Kothavalasa-Koraput and Budhapank-Salegaon. The new rail tracks would be initially used exclusively for running freight trains but later passenger trains would also be moved. The expanded railway lines would be different from dedicated freight corridors — the Eastern and the Western corridors covering nearly 3,300 km — that are meant only for goods trains. Unlike the new lines, the freight corridors are one long and linear network to ensure faster movement of goods at a lower unit cost.
“All the projects have been selected based on a original-destination study and congestion on the parallel lines. One of the four projects, Budhapank-Salegaon has an IRR of as high as 67 per cent. We should start executing the projects in the next three-to-four months," a senior official said.
“While the initial target for these lines are freight, we would also run passenger trains. The additional line would help us free up excess traffic from the existing lines,” the official added.
The Railways has identified 77 projects which it wants to take up on a priority basis, given their commercial viability. It has already readied detailed project reports (DPRs) in the case of 68 projects and sent 37 projects to NITI Aayog for their in-principle approval. The 37 projects involve a route length of 4,500 km and are estimated to cost about Rs 45,000 crore.
“We have received approval of NITI Aayog for 15 projects. We have decided to start tendering process of all the projects as we, in parallel, seek approval from the cabinet,” the official said.
By launching the tendering process alongside government approvals, the Railways claim to have reduced the tender calling period to about six to nine months from two years earlier. Presenting the rail budget in February this year, railway minister Suresh Prabhu had said that the national transporter was in a vicious cycle of chronic under-investment and sought to break it with a capital expenditure plan of Rs 8.5 lakh crore in the next five years.
To achieve this, the minister has decided to go for long-term finance from sovereign funds, large insurance and pension funds and multilateral financial institutions. As part of its plan to raise extra budgetary resouÂrces, the Railways signed up for Rs 1.5 lakh crore with LIC to fund its remunerative projects. It will receive the first tranche of Rs 2,000 crore from LIC on Tuesday.
There is a five-year moratorium in interest and loan repayment. The railway board has decided to use LIC funds for only those projects that have an IRR of more than 14 per cent. “The interest rate on LIC funds would be pegged to yield on long-term government securities,” another official said.
