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Cabinet decides to set up GoM for rail freight corridors

Written by: Staff

New Delhi, July 6 (UNI) The Union Cabinet today decided to set up a Group of Ministers (GoM) for finalising the technical and financial composition of a Special Purpose Vehicle (SPV) for dedicated rail freight corridors, touted as the most ambitious project of the Indian Railways till date.

This was announced by Information and Broadcasting and Parliamentary Affairs Minister P R Dasmunsi after a cabinet meeting, presided over by Prime Minister Manmohan Singh.

The composition of the SPV will be decided soon, he said.

Dedicated freight corridors -- tracks exclusively meant for super fast freight trains cruising at a speed of 90-100 km per hour as opposed to the 25 kmph at present -- will facilitate plying of higher axle load wagon and double stack containers.

The Task Force on the Delhi-Mumbai and Delhi-Howrah rail freight corridors, set up at the instance of the Prime Minister-headed Committee on Infrastructure (CoI), had earlier recommended the setting up of a SPV that would construct, operate and maintain the corridors on commercial principles and relying on efficient technology solutions.

The proposed corporate entity would provide the rail infrastructure but would not itself engage in freight business, thus providing non-discriminatory track access on payment of haulage charges by train operators.

The estimated cost of Western and Eastern Corridors is Rs.

11,446 crore and Rs 9695 crore respectively. As per the current estimates, work on both the corridors will be completed in about five years after the start of construction of the project.

The Task Force report had said the mechanism of SPV, owned jointly by the Railways and users of bulk freight services, such as port operators and shipping, oil, iron ore and steel companies, largely in the public sector, should be entrusted with the task of planning, construction and maintenance of infrastructure.

Some of the stake-holders identified for the purpose are Ports Trust, CCL, SAIL, and NTPC.

The coming together of the Railways and bulk users of freight services would ensure an adequate equity basis, which could be leveraged for market borrowings for investment in the freight corridor.

It also suggested that the SPV should not be fully owned by the Railways, and a more diversified ownership with other stakeholders, mainly from the public sector, as investors in equity would be in the best interests of the efficient management of the freight corridor.

Recommending that the Railway Ministry should be the administrative machinery for the SPV, the report said it must have effective independence in decision-making and be able to function with a market focus and business orientation.

The report pointed out that the high-density Delhi-Howrah (Eastern Corridor) and Delhi-Mumbai (Western Corridor) are already saturated in terms of line capacity utilisation and accelerated growth of the economy is only adding to the congestion on these routes.

''A quantum jump in capacity is, therefore, necessary for meeting the rising freight demand on account of robust domestic growth as well as the rapid increase in international trade,'' says the report.

Railway Ministry sources said work on the detailed Preliminary Engineering-cum-Traffic Survey and Final Location Survey for the project had already started.


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