The Hindu Business Line : GoM firms views on rail freight corridor

THE UNION Finance Minister, Mr P. Chidambaram, and the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, on their way to attend a GoM meeting at Rail Bhavan in the Capital on Wednesday. — Ramesh Sharma

New Delhi , Aug 9

The Union Railway Minister, Mr Lalu Prasad, on Wednesday said that the Group of Ministers (GoM) has formed its opinion on the dedicated rail freight corridor, but declined to divulge any details on the decision. The Finance Minister, Mr P. Chidambaram, and the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, attended the GoM.

"The deliberations of the GoM will go to the Cabinet soon and the Cabinet would take a final decision on the issue," Mr Prasad said, adding that he is not in a position to comment on the issue. The GoM formed to deliberate on the Railways' proposal on the dedicated freight corridor (DFC) had its second meeting here on Wednesday.

Financing Queries

The Ministry's proposal to form a special purpose vehicle for the DFC, which was sent to the Union Cabinet, was referred to the GoM after the Finance Ministry raised some queries regarding the exact financing pattern of the project.

The Finance Ministry is understood to have sought higher private participation in the project.

Mr Prasad declined to comment on questions regarding whether the GoM agreed upon a recommendation, and whether the Railways would be the owner of the DFC.

Earlier deadlock

The first meeting of the GoM was held on August 4, when the deadlock between the Railway Ministry and the Finance Ministry did not break.

After the meeting on August 4, Mr Prasad reiterated that the Railways would own the DFC. He had indicated that private participation could be in the form of lenders, but not owners.

"The Railways will be the sole owner of the DFC, but private funding, if necessary, would be invited," he had told reporters, adding that the Railways can raise the money from the market or other multilateral agencies.

Based on the Railways' internal calculations, the Rs 27,000-crore project (for the Eastern and Western corridor) would have a landed cost of almost Rs 70,000 crore, including interest payments, spread over 20 years — if the project was to be finished within a five-year period.

However, if the same project was done by a private player who would heavily bank on debts, the project would need a mammoth Rs 1.12 lakh crore spread over 20 years.