Railways needs to create capacity along its arterial routes viz, the Golden Quadrilateral and diagonals as well as augment capacity on rail links serving ports, industrial hubs and to existing and new mining areas, says Vinoo N Mathur, Managing Director, Bharuch Dahej Railway Company Ltd, in an interview with Sumantra Das.
How will Bharuch Dahej Railway Company Limited (BDRCL) augment rail freight in the country?
BDRCL is an important rail-port connectivity project in the country. It will augment the capacity for transportation of imported coal and fertiliser and catering to the needs of the Petroleum Chemical and Petrochemical Investment Region (PCPIR) at Dahej, a major investment and industrial development hub. With limited resources of good quality of indigenous thermal coal, the country’s power sector will depend to a much greater extent on imported coal and that is where the rail linkages such as ours will play a critical role. Moreover, Dahej as a point for importing coal is strategically located as it is much closer to power houses in northern, central and western India than other ports such as Mundra or Pipavav. The economic importance of the line will grow as additional port facilities develop at Dahej and more industries come up in the region.
How far do you think it will be able to eliminate capacity bottlenecks on the Golden Quadrilateral?
The line will provide access to the new Western Dedicated Freight Corridor (DFC) which should be operational by 2017 and will thus substantially augment freight movement capacity on the western leg of the Golden Quadrilateral. The line will be a feeder route to the Western DFC.
What are the major challenges and hurdles BDRCL faced in executing this project?
The major worry in any project is that there should not be any time or cost overrun. Although there was a time overrun owing to various factors beyond our control, the line was ready before the rail facilities in the port were operational. There was a significant cost overrun also, which resulted in the challenge of finding additional funding through debt and equity which we were successfully able to overcome although at the time we did go through a difficult period.
Secondly, there were disruptions in construction due to local agitations in Bharuch which we were able to resolve with the positive support of the Gujarat government. Thirdly, as the company after commencement of operations is also partially responsible for direct maintenance of track, signal and telecommunications, in the initial phase, we have had to recruit local youth and retired railway men and train them for various railway functions. Finally, as railway PPP structures are at a nascent phase, we have had to negotiate with Railways management in order to fine tune various aspects of working a process that is still ongoing.
Will this SPV continue to develop other such projects?
BDRCL was set up as a Special Purpose Vehicle (SPV) primarily for conversion of the narrow-gauge Bharuch-Dahej railway line to broad-gauge and manage it for the concession period. However, based on experience gained, we are offering our services to those who may be interested in availing our expertise in implementing PPP projects for creation of railway infrastructure, particularly in Gujarat.
In order to provide strategic rail communication links to ports, construction of mega-bridges for improving communication to the hinterland and development of multimodal transport corridors, which are the areas do you think government should give more focus?
In case the economic growth rate picks up again the way it is expected, railway freight must grow at a rate which is higher than GDP growth, else Indian Railways (IR) will lose market share. The Railways, therefore urgently needs to create capacity along its arterial routes viz, the Golden Quadrilateral and diagonals as well as augment capacity on rail links serving ports, industrial hubs and to existing and new mining areas.
It also needs to promote upgradation of terminals and development of logistic parks to handle growing volumes of traffic. Strengthening rail connection to ports is an important component of the rail infrastructure development requirements over the next few years.
In terms of using modern technologies, where do you think Indian Railways lacking?
Technology can play an important role in improving throughput on any route. Key elements are firstly signalling and telecommunication where modern systems can augment section capacity and safety. Secondly, with the objective of improving higher pay load per train, technology can help in improving wagon design with higher carrying capacity by improving the payload to tare ratio of a wagon and volumetric loading capacity.
Thirdly, improvements in track structure can help in permitting higher axle loads and increasing track loading density. Finally, apart from improving wagon and track structure more powerful locomotives will help in hauling heavier trains.
The new specifications for the Dedicated Freight Corridor will induct new technology in all these areas. Although Indian Railways’ broad-gauge system has tremendous potential for increasing capacity, it is constrained by the standard moving dimensions that are permitted over the system. These are also being modified for the new Dedicated Freight Corridors.
This project can be iconic for railway infrastructure developed in PPP model. How effective do you think this model is for railway projects?
The PPP model adopted by IR for port connectivity projects has evolved over time. One feature that stands out is that no uniform policy has been adopted and there are significant differences between agreements governing different SPVs. In the latest policy announcements, many of the shortcomings in earlier models have been removed. Constraints faced by BDRCL include high lease rental on land, a cap on profitability, issues relating to apportionment of freight etc, all of which impact viability will not be faced by companies in future. We expect some, if not all, of these issues will get resolved over time.
In the past, IR has done considerable hand holding and provided relief when an SPV was in trouble. Though IR has not followed a bidding process, the PPP model followed itself is robust as strategic partners, viz, ports, user industries and the state governments have come on board as equity holders. At present, IR is only using the PPP route to attract private funding while Operations & Maintenance (O&M) is fully controlled by them. This needs to be changed and private sector efficiencies need to be brought in the O&M area as well.