Exclusive | Railways to introduce BOT model in dedicated freight corridors

This will be for the first time that the build-operate-transfer (BOT) model will be introduced in a railway infrastructure project

February 15, 2021 / 03:30 PM IST

Following the roads sector, the Indian Railways, for the first time, is planning to introduce the build-operate-transfer (BOT) model for the construction of dedicated freight corridors (DFCs) by roping in private players.

Design, Build, Finance, Maintenance and Transfer (DBFMT), a type of BOT model, will be first experimented in a stretch of the Eastern Dedicated Freight Corridor (EDFC) between Sonnagar in Bihar and Dankuni in West Bengal.

The entire EDFC will stretch from Ludhiana in Punjab to Dankuni.

Major industry players like GMR, Tata Projects, L&T and foreign players like DP World are expected to be keen on the current model. The 538-km stretch is estimated to cost Rs 15,000 crore.

If successful, the DBFMT model will be replicated in the three upcoming DFCs that were announced in the Budget early this month. The three projects are East-Coast Corridor, East-West Sub Corridor and North-South Corridor, which may attract investments to the tune of Rs 2.17 lakh crore.

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“It is for the first time the BOT model is being tested in the Indian Railways. Private players will be involved in everything, except operations,” said Ravindra Kumar Jain, Managing Director of the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL).

Generally, under the BOT model, a private player builds a project, operates it and later transfers it to the original owner after a certain period of time.

Jain added that based on the current DBFMT model, the private player will be even exposed to traffic risk and will be in charge of maintenance, too. This PPP model has got its nod from the Railway Board and is currently under the consideration of Niti Aayog.

DFCCIL will float a tender for this as soon as it gets cleared by the Niti Aayog. One of the plans DFCCIL is considering is an assured traffic of 80 per cent to private players.

Though the Viramgam-Mahesana Gauge Conversion Project, executed by DS Construction in 2002, is believed by many to be the first railway BOT project in India, it cannot be considered as a BOT model in the real sense as no risk was involved for the company.

“It was more a financing model, where the company had invested some amount and we returned it in an equivalent annuity,” Jain said. The Sonnagar to Dankuni stretch will be taken up in two phases – the 282.22 km from Dankuni to Gomoh as Phase-I and the 256.58 km from Gomoh to Sonnagar as Phase-II.

The Eastern and Western dedicated freight corridors are expected to be completed by June 2022. The finance minister, in her Budget speech, had proposed the asset monetization of the DFCCIL assets after the completion of the projects.

The 1,192-km Ludhiana (Punjab) to Mughalsarai (Uttar Pradesh) stretch of the Eastern DFC, DFCCIL is getting funding from the World Bank. The Western DFC is being partly funded through a loan from the Japan International Cooperation Agency (JICA).
Shine Jacob
first published: Feb 15, 2021 03:30 pm

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