Loan condition by Japanese Govt.

Japanese loan condition may hit freight corridor

Mahendra Singh, TNN | Aug 5, 2013, 

NEW DELHI: The over Rs 80,000 crore dedicated freight corridor — Prime Minister Manmohan Singh's pet project — may be hit by a loan condition that requires the lead partner for any contract to be a Japanese company.

The Western Dedicated Freight Corridor, which will cover around 1,500 km from Dadri to Jawaharlal Nehru Port (Mumbai), is being funded by the Japan International Cooperation Agency (JICA), which has provided a loan of 677 billion yen.

While Dedicated Freight Corridor Corporation (DFCC) has awarded a Rs 6,700 crore contract for construction of the 640-km twin-track line between Rewari and Palanpur of western corridor, there is fear that the provision of a Japanese lead partner may reduce the competition.

L&T-Sojitz, a joint venture comprising L&T of India and Sojitz Corporation of Japan, had won the contract through an international bidding process which is expected to be completed in four years.

"The clause may lead to sub-optimal competition," said a railway official.

DFCC has started bidding for another 390 km in the western corridor from Palanpur to Vadodara, but the growing concern is that as competition is restricted to only consortiums led by Japanese companies, this may lead to higher cost than the estimated one with only few companies.

DFCC has already extended the deadline for bidding of the stretch from July 31 to August 31 and is expected to further extend it to ensure more companies come forward to bid.

The corporation has also conducted two roadshows in Japan to attract private companies.

Sources said the railway minister has also met the Japanese ambassador amid the growing concerns.

The work progress on eastern corridor is on expected lines. DFCC had awarded the Rs 3,300 crore contract for the 343-km-long Khurja-Kanpur section of Eastern Dedicated Freight Corridor, funded by the World Bank. The work will start in October.