Structuring the Dedicated Freight Corridor Project A Lost Opportunity

Abstract

A new large railway project offers opportunity for structuring in a manner that best value can be delivered towards transportation. This is more so in the context of an existing large integrated railway system (Indian Railways (IR)) directly under the Government. The structuring issues include ownership, role and market access, scope and design, financing, revenue and risk, and contracting strategies. The structures on the various dimensions evolve over time, driven by different stakeholders under an overall framework. This paper explores the evolution of two dedicated freight corridors in India (covering a distance of around 3300 kilometers), and critique them from the perspective of delivering the intended rail transportation. It identifies how the structures have moved in a direction where the autonomy of DFCCIL has been reduced to make the IR the sole owner and sole customer. The unbundling that has happened in other infrastructure sectors (aviation, maritime and road) to bring in greater autonomy and accountability has not yet happened in the railways. There is no unbundling of roles in terms of policy making and licensing, operations, and regulations. The critique brings out that the structuring of DFCCIL has been a lost opportunity in terms of opening up the railways sector.