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Funds critical for freight corridor

Japan International Cooperation Agency has said fund raising at favourable terms would be critical for the multi-modal freight corridor, reports Gaurav Choudhury.

business Updated: Oct 02, 2007 22:02 IST
Gaurav Choudhury

Fund raising at favourable terms would be critical for the ambitious dedicated multi-modal freight corridor, the Japan International Cooperation Agency has said.



"It is imperative that fund raising be arranged at favourable terms for the success of the project. It is advised that the government deliberate on the necessity of funds from international financing agencies such as the Asian Development Bank (ADB) and the World Bank in addition to funds from Japan," the Japan International Cooperation Agency said in its draft final report.



The railway ministry had commissioned the Japan International Cooperation Agency to carry out a comprehensive cost-benefit analysis of the project. Once commissioned, the corridor will reduce transit time between Delhi and Mumbai from 60 hours to 36. The success of the freight corridor will also be key determinant for the proposed Delhi-Mumbai industrial corridor.



The corridor, spread across 2,700 km with an additional 5,000 km of feeder lines, will involve an estimated cost of Rs 22,000 crore with computerised control on western and eastern routes.



The Japan International Cooperation Agency's economic and financial analysis showed that the financial internal rate of return for the western corridor would be about 9.08 per cent, while that of the eastern corridor would be around 15.59 per cent.



"It should be noted that careful arrangements are critical to prepare the fund for the dedicated freight corridor at interest rates less than 9.08 per cent," the study said.