Railways to approve model concession pact for freight corridor soon

NEW DELHI: The Indian Railways, having details of the track access charge for the upcoming freight corridor, will approve the model concession agreement soon.

"The agreement has already been approved by the law ministry and the components have been formulated," said an official of the Dedicated Freight Corridor Corporation of India .

DFC, a company promoted by the Railways, will earn its share of revenue through the track access charge for the movement of goods through upcoming 3,300 km-long freight corridor.

"The track access charge will be calculated covering construction cost, depreciation cost and operations and maintenance costs," added the official.

According to an official of the Railways, DFC has sought 5,000 crore in the upcoming budget to support its various projects.

The company has completed 66% of the land acquisition on both sides of the corridor and it expects that the process of land acquisition should be completed by the end of the current year.

The official said that the recent yen appreciation would not have much impact since the repayment period is almost about 40 years at an extremely low interest rate of 0.2 %.

Despite announcements of awarding sufficient number of projects in the current fiscal, the progress of the ambitious project has been tardy due to retendering on some stretches, stiff contractual clauses and delayed approvals from international lenders.

The DFC official said there are issues with international lending agency as many conditions are imposed and the lukewarm response for bids on the western corridor have resulted in greater delays. "Not many Japanese companies are coming forward. Competition is not up to the mark," the official said. He added that this leads to restriction in competition and a possibility of cartel formation. However, he said that once the project for the first stage goes through, the next ones would be easier.