Japanese ODA Loan
Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: India
Project: Dedicated Freight Corridor Project (Phase 2) (II)Loan Agreement: March 28, 2013
Loan amount: 136,119 million yen
Borrower: The President of India
2. Background and Necessity of the Project(1) Current State and Issues of the Railway Sector in India
The freight traffic in India is increasing at an annual rate of 15%, while the supply of railway transport
infrastructure has remained at a flat 6% during the Eleventh Five-Year Plan (April 2007 through March 2012).
As a result, the existing carrying capacity of railways is nearing saturation limits. Particular concern is theRailway route along the “Golden Quadrilateral” connecting Delhi, the country’s capital and largest
consumption-production base with Mumbai and Kolkata, the eastern and western gateway ports of India,and Chennai in the southeast. The volume of freight traffic along the Golden Quadrilateral already accounts
for roughly 65% of total freight volume in India. On the other hand, container cargo and volume ofagricultural products and mining/industrial resources are expected to further increase in the future. To
address the demand - supply gap, the country seeks to strengthen its transportation capacity through bothincreasing carrying capacity and introducing high-speed transport services.
(2) Development Policies for the Railway Sector in India and the Priority of the Project
The Government of India acknowledged the need to expand routes and introduce high-speed trains inorder to facilitate freight transportation along trunk routes through the railway working group establishedduring the formulation of the Twelfth Five-Year Plan (April 2012 through March 2017). In particular, the Planemphasizes the early development of dedicated freight rail lines, and upgrading of passenger/freight trains
along the routes between Delhi and Mumbai, and between Ludhiana, Delhi and Kolkata. The significance ofthis project was also mentioned in the Indian Railways Policy Paper Vision 2020 (targeting a term ending in2020) issued by the Ministry of Railways in December 2009. Therefore, this project is highly relevant toJapan and JICA's policies.
(3) Japan and JICA’s Policy and Operations in the Railway Sector in India
The “Promotion of Economic Growth” is one of the prioritized areas in the Japan’s Country Assistance
Program for India by the Government of Japan. Accordingly, JICA has set the “Promotion of Sustainable
Growth through the Development Assistance to the Infrastructure” as a prioritized area. The Project iscategorized under the “Improvement of Transport Networks” program within the said priority area. Thus, theassistance for the Project is consistent with Japan and JICA’s policy. And as part of this, JICA intends tosupport the development of trunk railways, roads, and other infrastructure mainly in India’s six major
metropolitan areas, as well as in special economic zones, economic corridors, and other industrial clusters
located along the Delhi-Mumbai industrial corridor, with the aim of promoting regional economic
development, efficient distribution, and foreign capital, and ultimately contributing to expanding investment
in India. The project, therefore, fundamentally conforms to JICA’s Japanese ODA Loan assistance policy. Sofar, Japan has approved 783.6-billion-yen supports for 24 projects in the country's railway sector under theyen loan scheme.
(4) Other Donors’ Activity
The World Bank (WB) is currently working on to assist the executing agency of the Project, DedicatedFreight Corridor Corporation of India Limited (DFCCIL) for formulating a business plan as well as financing
the Eastern Dedicated Freight Corridor. The Asian Development Bank (ADB) is currently working to assist
Indian Railways in improving their equipment-based and operation-based services under a sector loanscheme.
(5) Necessity of the ProjectAs per demand forecast along the Delhi – Mumbai route, rapid growth is expected in containertransportation between the international ports along the west coast and major cities in the inland area. Traffic
volume along the Western Corridor reached 100% of track capacity in 2010, while the Eastern Corridor
reached 120%. A material deficit in track capacity is expected, even if the Ministry of Railways implements
its improvement plan on existing lines formulated before the 2006–2007 fiscal year, as volume against track
capacity will reach 230% for the Western Corridor and 180% for the Eastern corridor during 2031–2032.
Given the situation, as a successor program to Phase 1, this project aims to achieve effective freighttransportation by enhancing transportation capacity. This will be done by constructing a new freight-only line
along the Western Corridor along with high-speed and high-capacity locomotives. Therefore, the aim of theproject satisfies the development policies of Indian government as well as the support policies of theJapanese government and JICA. Consequently, JICA's support for this project is highly necessary andrelevant.
3. Project Description(1) Project Objective
The objective of the Project is to cope with the increase of freight transport demand in India byconstructing new dedicated freight railway system between Dadri-Rewari and Vadodara-Mumbai sections ofthe Western Corridor (Delhi-Mumbai), thereby promoting comprehensive regional economic development
along the freight corridor, through improvement and modernization of inter-modal logistic system handlingconsiderable freight traffic and poised for massive growth.
(2) Project Site/Target Area
The Dadri–Rewari section stretching through the Uttar Pradesh and Haryana states and theVadodara–Mumbai section (Jawaharlal Nehru Port Trust (JNPT)) stretching through the Gujarat andMaharashtra states.
(3) Project Components
The project will construct new dedicated freight lines, install automated signal and communication
systems, and introduce locomotives capable of high-capacity, high-speed transportation over some 550-kmsection (a 123-km Dadri–Rewari section stretching through Uttar Pradesh and Haryana state and a 427-km
Vadodara–Mumbai (JNPT) section stretching through Gujarat and Maharashtra states).
1) Construction work (civil engineering, architecture, and track construction along approximately 550 km)
2) Procurement of electrical and mechanical, signal and telecommunication systems
3) Procurement of electric locomotives
4)

Consulting

services

operation/maintenance,(e.g.

designenvironmental

review,biddingmanagement,

assistance,

resettlementplan

project

supervision,

implementation

andmanagement, public announcements, resident education, management improvements)(4) Estimated Project Cost (Loan Amount)
426,020 million yen (Yen Loan Amount: 136,119 million yen)(5) Schedule
Planned for implementation between July 2010 and March 2023 (total of 153 months). The project will
be completed when the use of facilities begins (April 2018).

(6) Project Implementation Structure1) Borrower: The President of India
2) Executing Agency: Ministry of Railways (MOR) and Dedicated Freight Corridor Corporation of India Ltd.
(DFCCIL)
3) Operation and Maintenance System: DFCCIL (operation and maintenance of rails, signals,
communications systems, etc.). Indian Railways (implementation of operation of freight transportation,including the maintenance of locomotives).
(7) Environmental and Social Consideration/Poverty Reduction/Social Development
1) Environmental and Social Considerationi.

(a) Category: Aii.

Reason for Categorization: This project falls under the category of a railroad sector project that islikely to have an adverse impact on the environment under the “Japan Bank for International
Cooperation Guidelines for Confirmation of Environmental and Social Consideration” (Established inApril 2002). This project is therefore classified as Category Aiii.

Environmental Permit: The Environment Impact Assessment (EIA) report for this project wasprepared in November 2011, though it is not required for the Project in India’s legal system.

iv.

Anti-Pollution Measures: This project takes measures during construction to prevent the widespread
dust pollution, adequate storage of construction materials, installing noise barriers in the vicinity ofconstruction sites, and shifting to low-noise equipment specifications. To mitigate noise impact when
the railways are in service, noise barriers will be installed in the vicinity of densely populated areas,schools, and hospitals.

v.

Natural Environment: A part of the project site passes in the vicinity of a national park. However, thetracks to be constructed in this area will be installed parallel to the existing tracks and within therailway right-of-way. Therefore, additional adverse impact on the natural environment is likely to beminimal. Official permissions and/or approvals are required to develop the area, and we are in theprocess of obtaining these.

vi.

Social Environment: This project requires the acquisition of 2,252 ha of land, and the relocation of2,553 households. DFCCIL is hosting discussions with those affected by land acquisition andrelocation, and based on a resettlement and rehabilitation plan approved by the MOR, will
remunerate residents at the repurchase price, and provide the necessary support for recovery oflivelihoods.

vii.

Other/Monitoring: The executing agency will monitor unwanted noise and vibration; soil, air, andwater quality; borrow pits, vegetation, land acquisition, and resettlement. Also, a third party
consultant will monitor land acquisition, resettlement, and living conditions after resettlement.

2) Promotion of Poverty Reduction: N/A3) Promotion of Social Development (e.g. Gender Perspective, Measures to Prevent Infectious Diseases
Including AIDS, Participatory Development, Consideration for the Handicapped, etc.): This project
involves massive construction, so HIV/AIDS prevention measures for laborers will be implemented.
(8) Collaboration with Other Schemes and Donors: Collaborative activities with local NGOs are planned toprevent HIV/AIDS and other risks. Collaboration with WB assistance in improving the Eastern Corridor isplanned not only from a social and environmental perspective but also to enhance the organizational
capacity of DFCCIL.
(9) Other Important Issues: This project helps reduce GHG emissions. Effectiveness in mitigating climatechange (in the form of rough estimates of GHG reduction) for phases 1 and 2 of this project isapproximately 12.9 million tons annually. Technology developed in Japan for a portion of the electric
locomotives, signal/communication system, transformers, heat-treated tracks, and so on will be adopted
under the project.
4. Targeted Outcomes(1) Quantitative benefits
1) Operation and Effect Indicator (Phase 1 and Phase 2 projects combined)
Target (2020) (two years afterIndicators

Baseline (2010 actual)completion)

Operation rate (%)-

93

Running distance (1,000 km/day)-

1,421.4-

164-

1,908.1

Maximum speed (km/hour)-

100

Reduction in transportation time (hours)

-

34.6

-

5.0

Number of running trains (both directions)(Number of trains per day)Volume of transportation (millions of tons/km)
per day

Reduction in GHG emissions (millions oftons/year)

2) Internal Rate of Return (Phase 1 and Phase 2 projects combined)
Based on the conditions below, the Economic Internal Rate of Return (EIRR) of this project (Phase 1and Phase 2 projects combined) was calculated at 26.3%, while the Financial Internal Rate of Return(FIRR) was 9.4%.
EIRR:
Cost: Project cost (excluding tax), operation and maintenance expenses
Benefit: reduction in freight transportation costs in line with increasing demand
Project Life: 30 years
FIRR:
Cost: Project cost, operation and maintenance expenses
Benefit: revenue from freight charges
Project Life: 30 years(2) Qualitative benefits
Meeting the increasing demand for freight transportation, streamlining the physical distribution network,and promoting widespread economic development.
5. External Factors and Risk Control
Economic stagnation and deterioration in political situation in India and the surrounding area of the project
as well as natural disasters
6. Lessons Learned from Past Projects(1) Result of Evaluation of Similar Past Projects
Lessons were learned during previous similar projects regarding resettlement, it is absolutely imperativeto hold earnest discussions with residents subject to resettlement as soon as possible to eliminate delays inproject construction.
In cases where a public corporation implements, operates, and maintains a yen loan project, providing
comprehensive support (including financial improvements and enhanced operational efficiency) is
considered necessary while focusing on ensuring the financial sustainability of the public corporation.
(2) Lessons for the ProjectA vast amount of land must be acquired in order to implement this project. Based on the lessons
described above, JICA will urge executing agencies to periodically submit progress reports that include aresettlement plan for residents.
To ensure financial sustainability, a consultant hired by DFCCIL plans to help enhanceoperation/maintenance systems, formulate financial strategies, and so on.
7. Plans for Future Evaluation(1) Indicators to be Used:
1) Operation rate (%)2) Running distance (1,000 km/day)3) Number of running trains (both direction) (Number of cars running/day)
4) Volume of transportation (million ton・km) per day5) Maximum speed (km/hour)6) Reduction in transportation time (hours)
7) Reduction in GHG emission (million ton/year)8) Internal rate of return: FIRR (%), EIRR (%)(2) Timing of Next Evaluation:
Two years after plan completion