Business

DFC rejigs PPP model for 374-km freight corridor

To attract bidders for the ₹12,000-crore project to develop a 374-km stretch between Sonnagar (Bihar) and Andal (West Bengal), the Dedicated Freight Corridor Corporation of India (DFCCIL) has reworked the proposal to de-risk the private concessionaire.

The project, which is the first public private participation (PPP) project for the DFCCIL, is now proposed to be developed via a design, finance, build, operate and maintain and transfer (DFBOT) model.

“We are very aggressively making efforts to implement this PPP. Earlier also we tried a certain model. This stretch is important as it will cover major hubs for coal mining and steel industries. Our future corridors will also meet at Andal, so it is of strategic importance,” said MD R.K. Jain.

Mr. Jain added that during discussions on earlier proposed PPP models, stakeholders had expressed apprehension over risks related to construction, finance and revenues.

“All the bidders were very apprehensive about the traffic projections which we were giving over the 30-year contract period,” Mr. Jain said. “So, it has now been decided that we will make payment not on the basis of traffic run in that section, but on the services of the rail system developed by them,” he added. “So, if the private concessionaire offers an uptime of 20 hours/day, full payment will be given irrespective of the number of trains run by us or Indian Railways,” he added.

“The Indian Railways and DFCCIL shall take over the traffic and tariff risk, which will largely reduce the quantum of risk on the part of the concessionaire. The concessionaire shall be responsible for design, construction, finance and operations, and maintenance of the project,” he said.

Mr. Jain further said that now DFCCIL will become a partner in the project by sharing the equity cost. During the construction phase, 25% of the cost will be borne by DFCCIL.

This is the first-of-its-kind PPP model for Railways, he noted, adding that if the model proved successful it would be extended to future projects as well, including other railways projects and upcoming three more DFCs.

This section is expected to serve major power houses, industrial corridors and multi-modal logistics parks (MMLPs) in Haryana, Punjab, Delhi, and Uttar Pradesh.

The proposals will be floated for further consultation. These will then be vetted by DFCCIL, Railways Ministry and Niti Aayog, before being sent for approval of the Cabinet. DFCCIL expects these approvals to come by December 2021 and bids to be opened by March 2021.


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Printable version | Oct 27, 2021 5:51:40 PM | https://www.thehindu.com/business/dfc-rejigs-ppp-model-for-374-km-freight-corridor/article36639317.ece

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