Big Plans, Uncertain Timelines: Top projects in railways

Top projects in railways

A total of 38 top railway projects have been tracked by India Infrastructure Research. These entail a combined investment of Rs 11.63 trillion. Of these, 17 projects worth Rs 10.08 trillion are on the drawing board, 15 (Rs 1.46 trillion) are under construction, and six (Rs 94 billion) have been completed.

The maximum investments are in new line and high speed rail (HSR) projects. Completed projects form only a small part of this set, since project completion is dependent on the annual release of funds from the Centre. Such funding can be intermittent or inadequate as is the case in a number of projects. As a result, the railway sector always has a huge backlog of projects.

Key completed projects

Six key railway projects (an investment of Rs 1 billion or more) have been completed since January 2014. These involved an investment of nearly Rs 94 billion. Of these, two worth Rs 46.53 billion were gauge conversion projects, three worth Rs 37.73 billion were new line projects, while one (Rs 9.51 billion) pertained to doubling works.

In terms of capacity, the completed works involved stretches of over 1,296 km located in Assam, Arunachal Pradesh, Bihar, Uttar Pradesh, Tamil Nadu and Karnataka.  Three of these were greenfield projects, and the other three involved brownfield works. Investment-wise, two projects emerge as highly significant – the Rs 30.19 billion Rangiya-Murkongselek gauge conversion project (across Assam and Arunachal Pradesh) and the Rs 29.21 billion Digha-Sonepur rail-cum-road overbridge project in Bihar.

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Projects under construction

There are 15 key railway projects worth Rs 1,456 billion that are currently under construction. Of these, 11 projects worth Rs 1,278 billion are new line works, two worth Rs 90 billion pertain to doubling, and the remaining two together worth Rs 89 billion involve gauge conversion. These have a capacity of 6,752 km.

These projects cover a number of states – Haryana, Gujarat, Uttar Pradesh, West Bengal, Punjab, Bihar, Jammu & Kashmir, Manipur, Maharashtra, Karnataka, Andhra Pradesh, Chhattisgarh, Odisha, Assam, Andhra Pradesh, Jharkhand, Nagaland and Uttarakhand.  Most of these projects are expected to be completed after 2018.

The project that entails the highest investment is the Dedicated Freight Corridor (DFC) Project (both eastern and western stretches).  On the eastern DFC, civil contracts for 871 km of the route have been awarded for sections including Khurja-Bhaupur, Bhaupur-Mughalsarai, and Mughalsarai-Sonnagar. On the western DFC, civil contracts for 945 km of the route have been awarded for stretches including Rewari-Palanpur and Makarpura-Vaitarna. In the Jammu-Udhampur-Katra-Qazigund-Baramulla Railway Project, three phases have been commissioned while construction is in progress on the Katra-Banihal (110.3 km) stretch.

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Key projects on the drawing board 

A total of 17 projects worth over Rs 10 trillion are on the drawing board and scheduled to commence work in the near future. (Only projects with minimum investments of Rs 35 billion each have been considered.) Of these, 11 projects worth around Rs 6 trillion are for new lines. A significant share of investment (Rs 3.8 trillion) is dedicated to HSR projects.

The biggest project on the drawing board is the Delhi-Mumbai Industrial Corridor entailing an investment of over Rs 4,230 billion. The project will cover Delhi, Uttar Pradesh, Haryana, Rajasthan, Gujarat, Madhya Pradesh and Maharashtra, and support the Smart Cities project. Shapoorji Pallonji & Company Limited, the Patil Group, Larsen & Toubro, and Cube Construction Engineering Limited have been awarded contracts for various works. In addition, a request for proposal for the selection of a consultant for the environmental impact assessment of the industrial nodes being developed under the Chennai-Bengaluru Industrial Corridor project has been floated.  The construction work is expected to start in March 2016.

The Rs 2,016 billion Delhi-Chennai HSR Corridor Project is yet to commence construction. According to media reports, various government-level talks (with China, Spain and France) are ongoing. With respect to the Mumbai-Ahmedabad HSR Corridor Project, the Japanese government signed an MoU with India in December 2015, for a credit line of over Rs 790 billion. The loan is for a period of 50 years with a moratorium of 15 years, at an interest rate of 0.1 per cent. The Shinkansen HSR technology will be adopted for the project. Japan’s role is to transfer technology and to assist personnel in the development of the HSR. Progress on the Delhi-Chandigarh-Amritsar HSR Corridor Project is slow, but movement on this is expected in the near term.

The Asian Development Bank will help fund the Visakhapatnam-Chennai Industrial Corridor Project (Phase I) by way of a loan. The latest development took place in December 2015, when the Department of Economic Affairs, Ministry of Finance, approved a sum of over Rs 33 billion as a project loan and Rs 8.3 billion as the policy loan component for this project. Meanwhile, the Andhra Pradesh government will provide Rs 14 billion for the project.

The way forward

The railway sector is replete with future development opportunities. However, it is a sector with the greatest uncertainty with respect to project timelines. Project execution depends heavily on the annual fund flow from the Centre. However, this situation may change as big-ticket projects such as Delhi-Mumbai Industrial Corridor and the DFC come online, and bring in fresh revenue streams, which in turn will aid the fund flow for new projects.