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World Bank signs loan agreement worth 975 million dollars with India


October 27, 2011 - Washington

The World Bank today signed a 975 million dollar loan agreement with the Union Finance Ministry's Department of Economic Affairs and the Dedicated Freight Corridor Corporation of India Ltd. (DFCCIL) to set-up the Eastern Dedicated Freight Corridor-I (a freight-only rail line).

The corridor will help faster and more efficient movement of raw materials and finished goods between the northern and eastern parts of India and will also allow Indian Railways to free up capacity and better-serve the large passenger market in this densely populated region.

This 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 50 percent of India's total rail freight.

"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 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," said Venu Rajamony, Joint Secretary of Union Finance Ministry's Department of Economic Affairs.

"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 project also has significant contribution in reducing GHGs and the Government of India is committed to increasing the share of rail transport in this mix," he added.

The agreements were signed by Venu Rajamony, Joint Secretary, Department of Economic Affairs, on behalf of the Government of India; Anshuman Sharma, Project Director, on behalf of the DFCCIL; and Roberto Zagha, Country Director for India on behalf of the World Bank.

The Eastern Dedicated Freight Corridor Project (EDFC) will 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) and Ministry of Railways to best utilize heavy haul freight systems.

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 signed today 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.

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

ANI

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