Railways to develop dedicated rail freight corridor through PPP

New Delhi, June 13 (UNI) The Railway Ministry today said the dedicated freight corridor project on Western and Eastern routes will be executed through the Private Private Partnership (PPP).

Stating this at a seminar by Assocham on 'Dedicated Rail Freight Corridor-Public Private Partership', Minister of State for Railways R Velu said, ''After a long debate on the ownership issue, it has been decided to execute this project in PPP model.'' The Minister said PPP has become an important tool not only to generate resources but also to bring efficiency in the system.

The Minister also sought budgetary allocations from the Finance Ministry and the Planning Commission to support its capacity augmentation.

He added that the project will generate overall economic development in the country as it will generate employment, opportunities for construction industry, equipment manufacturers and user industries.

Mr Velu announced that the Railways has decided to execute Delhi-Kolkata, Delhi-Mumbai freight corridor projects through PPP as more than Rs 30,000 crore would be required for its implementation within a period of five years.

The railways have also decided to expand the freight corridor projects in four areas, comprising North-South, East-West, South and East coast without giving a particular time frame for their execution.

Mr Velu added despite registering a cash surplus of Rs 20,000 crore in 2006-07, the railways needed sufficient funds through budgetary allocations to achieve its objectives of growing ahead than the GDP growth for its ambitious expansion programmes.

He urged the Planning Commission and the Finance Ministry to take note of railways' multiple expansion requirements, indicating that provisions should be made in advance so that budget proposals for 2008-09 would include sufficient allocations for railways to support its expansion drive and substantially enhance its operation ratio from present 78.7 per cent.

The Minister regreted that this ratio is lowest ever for Indian Railways.

Earlier, Railway Minister Lalu Prasad Yadav had taken an open view that the project would be 100 per cent owned by the railways. But the Planning Commission was in favour of PPP.

Planning Commission Advisor B N Puri said the basic fundamenatal principal is to reduce the logistic cost, which at present is 14 per cent of the Gross Domestic Product (GDP).

The transportation cost accounts for 46 per cent of the total logistics cost.

Mr Puri said that the dedicated freight corridor will reduce this transportation cost by around 28 to 30 per cent. Whereas the RITES study show that reduction in the transportation cost will be around 60 per cent.

Mr Puri said, ''We have also taken into account the cost of coordination in the other modes of transport in the logistics management.'' Mr Velu also declared that large logistic parks along the proposed corridor routes would be set up, providing gamut of related services to the Indian industries to generate new opportunities in manufacturing, packaging and related industries.

Railways has been pursuing the state governments for moving ahead with these projects since the freight corridor would be made fit to move heavier and longer trains along with double stack container trains.

The Minister lamented that railways market share had come down from 60 per cent to 40 per cent and railways had been trying hard to augment it by improving its overall infrastructure and suitably competing with other mode of transport.

Speaking on the occasion, Railways' Board Member (Staff) K C Jena said investments required for the 11th plan period for capacity augmentation and various works on railways would be nearly two to three times the level of past five years and hence adequate support from the government would be needed to objectively fund its expansion programmes.

UNI