Rather than going the Public-Private Partnership (PPP) route, the Indian Railways has chosen to go solo in executing the first phase of the much-awaited 2,700-km Dedicated Freight Corridor (DFC) project linking Delhi-Sonnagar-Howrah and Delhi-Mumbai.‘‘The Dedicated Freight Corridor will not have Public Private Partnership, at least for the first 2,700 km. PPP options may later be explored while constructing branch lines,’’ Minister of State for Railways Naranbhai J Rathwa told The Indian Express on the sidelines of a convention on Public Private Partnership here today.Rathwa’s statement assumes signficance as the convention was being seen as an initiative of the Railways to explore PPP opportunities for the DFC project. However, even as Railways identified areas like Special Economic Zones, Mulit-Modal Logistic hubs, Inland Container Depots, passenger hubs and remote area connectivity as areas for possible PPP, the DFC found no mention in its PPP plans.The Finance Ministry had earlier indicated to the Committee on Infrastructure that the SPV for the freight corridor be structured on a ‘‘non-recourse basis’’ whereby the new company would be a self-sustaining independent company where neither the revenues of the new company nor the liabilities get reflected on the railway’s balance sheet.Sources said there was a growing feeling within the Railway Ministry that it was capable of constructing the Rs 25,000-crore project without any private participation. ‘‘We had a fund-balance of Rs 13,000 crore last year which we aim at taking to Rs 20,000 crore this year. Estimated to be completed in five years, the DFC will require around Rs 5,000 crore from the Railways which should not be a problem,’’ said a senior Railway Board official.Having put its finances in order of late, the ministry seems geared up to take the bull by the horns. ‘‘Railways will have the controlling interest in the DFC Project. We can execute the project on our own but are not closed to the idea of PPP. The idea is that if we can raise funds through PPP, we can use our financial resources in other areas and projects,’’ said Railway Board Chairman JP Batra. According to Batra, Indian Railways need about Rs 50,000 crore to complete 230 pending projects. Railway officials said this was one of the primary reasons why the ministry was keen on exploring PPP in a host of areas.‘‘We have recently sent a note to the Cabinet on the creation of a Special Purpose Vehicle (SPV) for the project. The funding plan of the project will soon be finalised,’’ Batra added. An SPV on the lines of the Delhi Metro Rail Corporation has to be set up to execute the DFC project.Meanwhile, international experts feel PPP would have been better for the project. ‘‘Not only does one save money which can be used for other projects, PPP brings in a lot of efficiency in project execution as it ensures delivery of the project in time and within budget,’’ said Wolfgang Reub of KfW IPEX Bank, Germany, who made a presentation on his bank’s role in structuring PPP in rail projects at the convention.‘‘It would be good for the Indian Railways to open up and go for private participation. As for the DFC project, PPP could be explored in select areas like setting up of logistic parks and construction tracks in select sections,’’ said Christoph Wolff, director of McKinsey & Company, Germany.
