Will award 95% of contracts by FY16-end: DFCC

Adesh Sharma, MD Of Dedicated Freight Corridor Corporation (DFCC) gives a ringside view of the quantum of contracts that will be awarded by DFCC in FY15 and FY16.

Below is the transcript of Adesh Sharma’s interview with CNBC-TV18's Sonia ShenoyQ: Can you start off by telling us what is the quantum of contracts that will be awarded by the DFCC by the end of FY15 and in FY16?A: Dedicated Freight Corridor project is one of the ambitious project of Indian Railways. This was started in 2006 onwards and has picked up momentum. We have acquired more than 80 percent of the land and awarded contracts in some of the sections of the eastern i.e. from Khurja to Kanpur. Similarly work is progressing on the western corridor between Rewari to Palanpur area. So, this year 2015-16 our efforts will be to award 95 percent of the contracts for the entire length of both the corridors. So we will be finalising all the contracts during the financial year 2015-16.

Q: You said 95 percent of the contracts will be awarded by the end of FY16. How much in terms of quantity will you award? A:Around Rs 45,000 crore will be the total value of the contract which would be awarded this year and this includes the contract which has been awarded worth around Rs 10,000 crore. So, Rs 35,000 crore is the total value of contract to be awarded during 2015-16 Q: So by when do you expect these Rs 45,000 crore worth of contracts to be completed, what is the expected timeline? A: Already the contact has got a completion period of two to three years and that is why we have laid out timelines to complete western corridors by 2018 and eastern corridor by 2019. These are the timelines we will be adhering to so that we complete our project and commence the running of freight trains on both the corridors. Q: Can you give more details on financing. What is the total cost of the eastern and western corridor project put together and how exactly will the financing be done? A: Total cost of the project is Rs 81,181 crore, both put together i.e. eastern and western corridors. Out of that one third will be borne by Indian Railways and two third by the funding agencies and the loan conditions are basically different with World Bank and different with Japan International Cooperation Agency (JICA). Loan conditions with the World Bank it says that we have to give a loan with interest rate of less than one percent per annum but with hedging it comes roughly to around seven percent. Similarly with the western corridor also funding arrangement is done by JICA and JICA is charging very low interest from MEA and with the hedging arrangements it comes to roughly seven percent. So, overall interest rate comes to around seven percent in both these corridors and funding will be two third one third as I mentioned. Total cost of about Rs 81,181 crore. That is the total cost of the project.

Q: Getting a little more granular then which are the projects in which work has already begun and bids have been put out. So, who are the companies which have bid for these projects? A: On the eastern part, work is in progress between Khurja to Kanpur. The stretch is around 350 kilometres. And then Kanpur to Mughalsarai that is having a length of 350 kilometres. So, first part i.e. Khurja to Kanpur Tata-Aldesa has already taken this work which is in progress for the entire stretch.