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15th June, 2011

Dedicated Freight Corridor

The Indian Railways quadrilateral linking the four metropolitan cities of Delhi, Mumbai, Chennai and Howrah, commonly known as the Golden Quadrilateral; and its two diagonals (Delhi-Chennai and Mumbai-Howrah), adding up to a total route length of 10,122 km carries more than 55% of revenue earning freight traffic of IR. The existing trunk routes of Howrah-Delhi on the Eastern Corridor and Mumbai-Delhi on the Western Corridor are highly saturated, line capacity utilization varying between 115% to 150%. The surging power needs requiring heavy coal movement, booming infrastructure construction and growing international trade has led to the conception of the Dedicated Freight Corridors along the Eastern and Western Routes. Accordingly, the seeds for the project were sown as early as in April, 2005, wherein, Honble Prime Ministers of India and Japan made a joint declaration for feasibility and possible funding of the dedicated rail freight corridors. Subsequently, a SPV, named "Dedicated Freight Corridor Corporation of India Limited (DFCCIL)" was incorporated in October 2006 and the project was approved at a cost of ` 281.81bn (currently estimated at ` 480bn). The length of the Eastern and Western DFC will be 1,799 km and 1,531 km respectively (total of 3,330 km). Features of DFC Feature Height Width Container Stack Train Length Train Load A Green Project The DFC is also a green project as, by shifting freight transportation from road and conventional rail to the more energy-efficient DFC rail, it will lower energy consumption in India's transport sector. Moreover, unlike the existing rail network, which runs on a combination of diesel and electrical locomotives, the corridor will operate entirely through electric locomotives, reducing carbon emissions significantly. In fact, a carbon footprint analysis conducted by the Indian Railways finds that the DFC will generate 2.25 times less greenhouse gas emissions over a 30 year period compared to business as usual. www.ghallabhansali.com 1 Existing 4.265 m 3200 mm Single Stack 700 m 4,000 Ton On DFC 7.1 m for Western DFC 5.1 m for Eastern DFC 3660 mm Double Stack 1,500 m 15,000 Ton

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15th June, 2011 Project Phasing Both corridors will be constructed simultaneously. It is envisaged that the corridors will be fully operational over their entire length by 2017. The following table indicates the tentative phasing of the project:Western Corridor Phase I Phase II Phase III Rewari- Vadodara (920 Kms) Vadodara- JNPT(430Kms) Rewari Dadri(140 Kms) Eastern Corridor Phase Ia Phase Ib Phase II Sonenagar -Mugalsarai Mughalsarai-Khurja (710 kms) Khurja-Ludhiana (Dandarikalan) 2009-2016 2010-2016 2011-2017 Year 2009- 2016 2010-2017 2010-2017

Project Funding For Corridors The first phase of the Eastern Dedicated Freight Corridor (DFC) Project in India got a boost as the World Bank approved loan worth US $ 975 million dollar (approc Rs 4,368 crore). The 1,800-kilometre eastern DFC is being constructed for freight specific transport of commodities by Indian Railways between Delhi and Howrah. The current loan has a maturity of 22 years, with a grace period of seven years. For developing the western corridor, Dedicated Freight Corridor Corporation India Limited (DFCCIL) has already tied up with the Japanese Bank of Industrial Cooperation (JBIC) for Rs 4,500-crore funding as loan for the first phase, likely to be commissioned in March 2016. Funding of Rs 11,500 crore for phase-II, which is expected to be commissioned in December 2016, is also being tied up with the Japanese government. Freight traffic on the Golden Quadrilateral linking the four cities of Delhi, Mumbai, Chennai and Howrah, and its two diagonals, Delhi-Chennai and Mumbai-Howrah, carries more than 55 per cent of revenue earning freight traffic of the Indian Railways. The DFCCIL executive also said the Japanese government had reaffirmed its funding commitment for the project despite the recent disaster at the Fukushima nuclear plant that followed a massive earthquake in March in that country. www.ghallabhansali.com 2

15th June, 2011

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Pricing Advantage Low Damages in Transit Speed Time Sensitive/Reliability Value Added Services Capacity Frequency & Availability Fuel Efficiency

DFC v/s Competing modes efficiency scorecard

CO2 Mitigation

Economizing Land Use

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15th June, 2011 Dedicated Freight Corridor bids coming, Rs 10,000 cr business on offer The Railways will award contracts worth Rs 10,000 crore by the end of this year to kick start one of India's most ambitious infrastructure projects to build dedicated freight corridors to connect north India with Mumbai and West Bengal. Contracts would be awarded for the first phase of the Rs 77,000 crore freight corridor project, that will build new tracks to transport containers and commodities at maximum speeds of 100 km an hour, reducing travel time by a third. The initial contracts involve engineering works for 1,000 km of the new lines, including 650 km in the Mumbai-Delhi leg of the project, called the Western Corridor, and the balance would be for the eastern line. Besides civil engineering contracts, DFCCIL also plans to award contracts of about Rs 1,500 crore by mid 2012 for electrification and signalling works for the 1st phase of Eastern Corridor. For the Western Corridor, it may award contract worth Rs 4500 crore by the end of the next fiscal. For the first phase, the company has completed land acquisition for 90% (600 kms) of the western corridor and about 50% of the land acquisition has been completed for the Eastern Corridor. Along with freight corridor, logistics parks would be set up providing valueadded services. These would be multi-modal logistic hubs having facilities like warehousing and storage helping in faster movement of cargo. Following Companies are expected to benefit: 1) 2) 3) 4) 5) Larsen and Toubro Ltd Kalindee Rail Nirman(Engineers) Ltd Titagarh Wagon Ltd Kernex Microsystems(India) Ltd Texmaco Rail and Engineering Ltd

Conclusion: The freight corridor is the backbone of a $90 billion project to build an industrial corridor between Delhi and Mumbai with a series of industrial parks, airports, power plants and new townships. Once commissioned, the project would mark an inflexion point in the 150-year-old history of Indian Railways which has so far run only mixed traffic across its network, failing to capture the high demand for freight movement. The government also plans to develop a Delhi-Mumbai Industrial Corridor (DMIC) with manufacturing zones along the freight corridor. The DFC program will provide India the opportunity to create one of the world's largest freight operations, adopting proven international technologies and approaches which can progressively be extended to other important freight routes throughout the network. It will also enable the Indian Railways to recapture the market share they lost to the very competitive Indian trucking sector, which has among the lowest road freight tariffs in the world. www.ghallabhansali.com 4

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15th June, 2011 Rajesh Dedhia rajeshd@ghallabhansali.com

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Information Sources: dfccil.org World Bank Mics

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