World Bank approves $975 m loan for India's Eastern Dedicated Freight Corridor

New Delhi, June 3, 2011

The World Bank has approved a loan of $975 million to help the Indian Railways set up the Eastern Dedicated Freight Corridor (EDFC), a freight-only rail line, that will help faster and more efficient movement of raw materials and finished goods between the Northern and Eastern parts of India.

The corridor will also allow Indian Railways to free up capacity and better-serve the large passenger market in this densely populated region.

The project 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 make a quantum leap in increasing the railways’ transportation capacity by building high-capacity, higher-speed dedicated freight corridors along the "Golden Quadrilateral" – the four rail routes that connect Delhi, Mumbai, Chennai, and Kolkata.

Currently, these routes account for just 16 percent of the railway network’s length, but carry more than 60 percent of India’s total rail freight.

A press release from the Bank said the EDFC would ease congestion choking the railway system and reduce travel-time for passenger trains on the arterial Ludhiana-Delhi-Mughal Sarai railway route.

The corridor will add additional rail transport capacity, improve service quality and create higher freight capacity. It will also help to develop the institutional capacity of the Dedicated Freight Corridor Corporation (DFCCIL) to build and maintain the DFC infrastructure network, it said.

According to the release, augmenting its transport systems is a crucial element of India’s trillion-dollar infrastructure agenda for the next Five-Year Plan (XIIth Plan) which starts in 2012.

Since the 1990s, road transport has advanced more rapidly than the railways, and now accounts for about 65 percent of the freight market and 90 percent of the passenger market in India, and those shares are growing. The Government of India is committed to increasing the share of rail transport in this mix.

"The Indian Railways urgently need to add freight routes to meet the growing freight traffic in India, which is projected to increase more than 7 percent annually. Dedicated freight corridors will not only meet this growing freight demand, but also decongest the already saturated rail network and promote the shifting of freight transport from road to more efficient rail transport," Mr Venu Rajamony, Joint Secretary, Department of Economic Affairs, Ministry of Finance, said.

World Bank financing for the EDFC will cover a route length of 1,130 kilometers (out of a total corridor length of 1,839 kilometers) and will be provided in three phases.

The project approved by the Bank will finance the first phase, which is the 343 kilometer section that runs between Khurja and Kanpur. 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.

"Implementing 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," said Mr Roberto Zagha, World Bank’s Country Director in India.

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. Unlike the existing rail network, which runs on a combination of diesel and electrical locomotives, the proposed DFC corridor will operate entirely through electric locomotives, thereby further reducing GHG emissions.

A Carbon Footprint Analysis conducted by DFCCIL for the Eastern DFC Project shows the corridor is expected to cause 2.25 times less carbon emissions when compared to a scenario where the freight is transported through a non-DFC network of the Indian Railways. It also 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 millions of GHG emissions in the absence of EDFC – a 55 percent reduction of GHG emissions. EDFC will also bring about a 15 percent reduction in carbon intensity as compared to using existing alternate routes of transport.

"Studies show that DFC will enable the Indian Railways to reduce GHG emissions on these routes by over 64 percent - an actual reduction from 12.3 million tons of GHGs to 4.3 million tons of GHGs as a result of DFC," said Mr Ben L. J. Eijbergen, Lead Transport Specialist and Task Team Leader for the Project.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 7-year grace period, and a maturity of 22 years, the release added.

NNN