New Delhi: In a major embarrassment to the Indian Railways, the Cabinet Committee on Economic Affairs (CCEA) declined yet again to issue a final clearance for the dedicated freight corridor (DFC), the largest infrastructure project proposed by the ministry headed byLalu Prasad.
As a result, the big ticket project, initiated two years ago, will be further delayed.
Explaining the reason why final clearance had been denied, Railway Board financial commissioner Sudha Chobe said the finance ministry had raised questions on the funding of the project.
The CCEA has sought more details on how the DFC project would be funded and the railway board will now have to make a fresh presentation.
The DFC project involves building 2,700km of track for dedicated transportation of freight goods between Mumbai and Delhi as well as Ludhiana and Howrah at an approximate cost of Rs28,000 crore as estimated by RITES Ltd, the survey arm of the ministry.
The CCEA was to issue a final clearance after a late evening meeting on Monday. However, for the third time, it issued only an in-principle approval to the project. This means that a special purpose vehicle (SPV), called the Dedicated Freight Corridor Corporation Ltd, set up to execute the project cannot begin preliminary work.
Earlier, serious differences had arisen between the Japan International Cooperation Agency (JICA), that was expected to part-fund the project, and the Railway Board. The disagreements range from the technology to be used, as well as the funding of the corridor. The board had earlier refused to accept the Rs50,000 crore cost estimated by JICA to build the corridor, a figure nearly double the estimate arrived at by RITES.
After the CCEA meeting, the railways seems to be preparing to consider the JICA loan once again. “The JICA loan is one of the options we are looking at,” said Chobe. JICA officials were unavailable for comment.
“The project has not been handled properly. You cannot rush through the paper work when it comes to a major project like DFC. There should be clarity on the cost of the project at least now,” said a former railway officer, who was associated with the project.
Meanwhile, the Union cabinet also approved implementation of an Integrated Handlooms Development Scheme during the 11th Plan, at a budgetary cost of Rs790 crore. The scheme will help weavers diversify, as well as access market support measures.
Funding for the second phase of an ongoing project to increase the drinking water supply to industrial sections of the city of Hyderabad has also been approved. The second phase of the Krishna Drinking Water Supply project will cost roughly Rs817 crore, of which around Rs211 crore has been spent by March 2007. The project falls under the Jawaharlal Nehru National Urban Renewal Mission.
Reuters contributed to this story.