ADB rejects grant for rail projects

Rail Vikas Nigam Limited (RVNL)—set up to implement crucial development works of the Railways—has run into trouble with the Asian Development Bank refusing to fund several financially non-viable projects.

RVNL has been forced to explore other funding options for 56 projects costing nearly Rs 12,000 cr. Approaching the World Bank is one option the Railways is considering. ADB will finance only 13 projects—the most profitable sections of the Golden Quadrilateral (GQ) and its diagonals—with a funding of Rs 1,500 cr. Plans are to strengthen the GQ connecting four metros, to increase the speed of freight trains. ‘‘There is an urgent need to strengthen the GQ network since wear and tear is too much. The same is the case with the diagonals. In agreeing to finance it, the ADB knows it cannot go wrong since the ‘rate of return’ here will be more than the cost of capital,’’ said an official.

Railway Board chairman R.K. Singh said they were trying to get funds for mega-bridges from the World Bank. About the remaining projects, he said there were a number of other options including setting up of Special Purpose Vehicles, market borrowing, etc.