The Union Government and the Japan International Cooperation Agency (JICA) are likely to sign an agreement for the first tranche of Yen 9 billion (approx Rs 454 crore) of the main loan, to fund the dedicated rail freight corridor.

This is over and above the Yen 2.6-billion loan signed under the engineering services agreement in December 2009. The engineering services loan is likely to be used to prepare and draw up designs of the project and structure the bid documents. The loan will be disbursed by JICA to the Dedicated Freight Corridor Corporation of India (DFCCIL) on an "as and when required basis" over fiscal 2010-11 and 2011-12.

The Japan Government has agreed to a Yen 450-billion (approx Rs 22,050 crore) tied-loan to fund the western corridor of about 920 km to be built between Rewari and Vadodara. As per the terms of the tied-loan, 30 per cent of the amount will have to be spent on procuring equipment from Japan.

The engineering services consultant, who will advise the Union Railway Ministry on the procurement process from Japan, is likely to take about six-eight months. Therefore, the need to use the main loan is unlikely to arise before the last few months of 2010-11.

Related Links:
Project profile