Thursday, July 2, 2015

New Multimodal Possibilities as Indian Rail Freight Corridor Develops

Further Funding to Boost Cargo Options
Shipping News Feature

INDIA – The World Bank board has approved its third loan for the Eastern Dedicated Freight Corridor (EDFC) which aims to increase the speed and efficiency of movement of raw materials and finished goods between the northern and eastern parts of India. Having already invested over $2 billion in the project, the World Bank is now lending a further $650 million to be used in the third section, the 401 kilometre Ludhiana-Khurja rail link in Uttar Pradesh, Haryana and Punjab which will enable faster multimodal transport for cargo in the region outlined in the scheme.

Once completed the Eastern Corridor will be approximately 1,840 km long extending from Ludhiana to Kolkata. The World Bank is supporting the EDFC as a series of projects in which the three sections with a total route length of 1,146 km will be delivered sequentially, but with considerable overlap in their construction schedules.

The project will help increase the capacity of these freight-only lines by raising the axle-load limit from 22.9 to 25 tons and enable speeds of up to 100 km/hr. It will also help develop the institutional capacity of the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) to build and maintain the DFC infrastructure network. Onno Ruhl, World Bank Country Director in India, said:

“Implementing the Dedicated Freight Corridor programme will provide India the opportunity to create one of the world’s largest freight operations. The corridor, which will pass through states like Uttar Pradesh and Bihar, will benefit from the new rail infrastructure, bringing jobs and much-needed development to some of India’s poorest regions. Moving freight from road to rail will reduce the carbon footprint of freight by 2.25 times.”

The first loan of $975 million for the 343 km Khurja-Kanpur section in the EDFC programme was approved by the World Bank Board in May 2011 and is already under implementation. So far it has awarded contracts worth $700 million for this section. Compensation has been awarded for about 95% of the 1,410 hectares of land being acquired from the 29,253 affected. The second loan of $1.1 billion for EDFC2 which covers 402 km from Kanpur to Mughal Sarai was approved by the World Bank in April 2014. Under EDFC2, civil works contract for about $800 million has been awarded and contracts worth about $240 million, for establishing rail systems, are under procurement.

The EDFC is part of India’s first Dedicated Freight Corridor (DFC) initiative – being built on two main routes – the Western and the Eastern Corridors. These corridors will help India increase the railways’ transportation capacity by building high-capacity, higher-speed dedicated freight corridors along the ‘Golden Quadrilateral’. Currently, the rail routes that form a ‘Golden Quadrilateral’ connecting Delhi, Mumbai, Chennai and Kolkata, account for 16% of the railway network’s route length, but carry more than 60% of India’s total rail freight.

Augmenting its transport systems is a crucial element of India’s trillion-dollar infrastructure agenda. Since the 1990s, road transport has advanced more rapidly than the railways, and now accounts for about 65% of the freight market and 90% of the passenger market in India. Ben Eijbergen, Programme Leader, Economic Integration and the Task Team Leader for the Project, commented:

“The Indian Railways urgently needs to add freight routes to meet the growing freight traffic in India, which is projected to increase more than 7% annually. These freight lines will wholly transform the capacity, productivity, and service performance of India’s busiest rail freight corridors. At completion, it will be able to more than double its capacity to carry freight, with faster transit times, being more reliable and at lower cost.”

In addition to the efficiency improvement and other operational benefits, the Project is expected to bring in significant reductions of Green House Gas (GHG) emissions. A Green House Gas Emission Analysis conducted by DFCCIL for the Eastern DFC Project shows that the Eastern corridor is expected to generate about 10.48 million tons of GHG emissions up to 2041-42, as against 23.29 million of GHG emissions in the absence of EDFC – a 55% reduction of GHG emissions.

Economic opportunities are also being explored along the freight corridor. The government is planning to set up 7 integrated manufacturing clusters using EDFC as the backbone. These clusters will be set up with an investment of about $1 billion on either side of EDFC. The loan, from the International Bank for Reconstruction and Development (IBRD), has a 7-year grace period, and a maturity of 22 years.

We have heard of many similar schemes to improve India’s transport infrastructure over the past few years, many of which amounted to nothing, often because of vested interests from certain geographically located groups in a country where political divisions are often a barrage to progress. The subcontinent however would seem the perfect site to create a freight rail infrastructure of this proposed type and it seems that perhaps at last a plan to make a real difference to the competitiveness of India’s export and distribution potential might become a reality.