Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: India
Project: Dedicated Freight Corridor Project (Procurement of Electric Locomotives)
Loan Agreement: September 15, 2017
Loan Amount: 108,456 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
Freight traffic in India has been increasing at an annual rate of 10 to 15 percent
since 2000, stretching the existing freight rail to the limit of its carrying capacity.
Under the Tenth Five-Year Plan (April 2002 - March 2007), the total amountcarried by freight rail grew at a lower annual rate of nearly 8 percent. The freightrail traffic for 2007 stood at 475 billion ton-km. The share of freight rail in freighttraffic has been on the decline as well. It decreased from 48 percent in the second
half of the 1990s to about 30 percent in 2002. Under these circumstances, thedevelopment and upgrading of railways, which are capable of mass transit andare eco-friendlier than road transport, have become essential for the economic
growth of India. A case in point is a set of railway sections known as the “Golden
Quadrilateral (GQ),” which connects four major cities: the capital city of Delhi, thecountry’s leading center of consumption and production, —Mumbai, which plays
the role as the gateway port, for the subcontinent in the west, Kolkata in thenortheast, and Chennai in the southeast. The GQ accounts for about 65 percentof the nation’s freight traffic. Two corridors in the GQ--between Delhi and Mumbai,and Delhi and Kolkata--are home to a total population of some 740 million.
According to the Government of India’s projections for freight traffic demand, theWestern Corridor will see a surge in demand for container traffic carrying daily
necessities and construction materials such as cement and iron ore between
international ports along the western coast--most notably Jawaharlal Nehru Portin Maharashtra State--and inland consumption centers. The Eastern Corridor, on
the other hand, will witness a jump in bulk freight traffic transporting coal, iron ore,cement, fertilizer, and grain. The current track capacity is only about 50 percent of
the passenger and freight traffic demand projected for 2032 on average for allsections in the country. The track capacities of the eastern and western sections
are nearing their limits, highlighting the need for an immediate response.
(2) Development Policies for the Railway Sector in India and the Priority of the Project
In its Twelfth Five-Year Plan (April 2012-March 2017), as well as the Eleventh
Five-Year Plan, the Government of India refers to the need to expand lines formass transportation along the trunk railways, introduce high-speed freight cars
with an axle load of 25 tons, and improve access to port facilities among otherneeds. Special emphasis is placed on the need for early construction of tworailway sections dedicated to freight traffic: between Delhi and Mumbai andbetween Ludhiana and Kolkata via Delhi, as well as the need to increase
passenger and freight rolling stocks. The Dedicated Freight Corridor Project(Procurement of Electric Locomotives) (the “Project”), designed to introduce
high-power, high-speed electric locomotives for the first section, is identified as animportant project in the Twelfth Five-Year Plan.
(3) Japan and JICA’s Policy and Operations in the Railway Sector

Japan’s Country Assistance Policy for India (March 2016) identifies enhancing
connectivity as one of the priority areas of assistance. It states to the effect that,with a view to de-bottlenecking the infrastructure constraints to investment andgrowth, Japan will support the development of a transportation hub and network
infrastructure, as well as electricity and other infrastructure to strengthen
connectivity among major industrial cities and economic zones, and also among
regions in the country. JICA Country Analysis Paper for India (March 2012) states
that, in order to eliminate economic bottlenecks, assistance is necessary tosupport the development of trunk railways (which may include high-speed rail andfreight transport), urban rail, roads, ports, and other infrastructure that willcontribute to promoting regional economic development, streamlining logistics,
and increasing investment by foreign capital, chiefly in areas where JICA’s
assistance will likely have a greater impact: special economic zones, economic
corridors, and other industrial clusters located in India’s six major metropolitan
areas and along the Delhi-Mumbai Industrial Corridor. The Project is consistent
with the policy and analysis above. It is worth adding that, by January 2017, Japan
made a total of 32 ODA loan commitments in the railway sector in India, totaling
1,394.4 billion yen or 71.9 percent of the total commitments made for India. Fiveof the 32 commitments, totaling 334.3 billion yen, were made for Phase 1 andPhase 2 of the Dedicated Freight Corridor Project. The technical cooperation
projects related to the Project include the Feasibility Study on the Development ofHigh-Axle Load Multimodal Dedicated Freight Corridors with Computerized
Control for the Delhi-Mumbai and Delhi-Howrah Rail Routes (2006-2007) and theTechnical Cooperation Project on the Assistance in Proof Examination for
Running Stability of Dedicated Freight Corridor Transportation (2008).
(4) Other Donors’ Activity
The World Bank has offered approximately 4,361 million US dollars in assistancefor the Ludhiana-Mughal Sarai section (1,193 km) of the Eastern DedicatedFreight Corridor (EDFC). The Asian Development Bank (ADB) is providing
institutional and other assistance to India’s railway sector, especially fororganizational reforms of Indian Railways. Earlier, the ADB extended 250 million
US dollars in aid to Bangalore Metro and 176 million US dollars in aid to Jaipur
Metro.
(5) Necessity of the Project
The Project is consistent with the development policies of the Government of India
as well as Japan’s and JICA’s assistance policy and analysis. It will also help toachieve efficient freight transport with improved freight transport capacity throughthe introduction of high-power, high-speed electric locomotives following thePhase 1 and Phase 2 of the Dedicated Freight Corridor Project, designed toconstruct new dedicated freight lines. The Project is also expected to contribute toattaining Goal 9 of the SDGs. Therefore, JICA’s support for the implementation ofthe Project is much needed.
3. Project Description(1) Project Objectives
The objectives of the Project are to cope with the freight transport demand that isexpected to growth rapidly and streamline logistics networks by introducing
high-power, high-speed locomotives in the Delhi-Mumbai section as part of theprogram to construct new dedicated freight rail line for this particular section andthe Ludhiana-Delhi-Son Nagar section, thereby contributing to broader economic
development in India.
(2) Project Site/Target Area
The states of Haryana, Uttar Pradesh, Rajasthan, Gujarat, and Maharashtra(3) Project Component
1) 200 electric locomotives (9,000 ph; 6-axle) (international competitive bidding)(4) Estimated Project Cost (Loan Amount)
203,657 million yen (loan amount: 108,456 million yen)(5) Schedule
September 2017 - March 2027 (117 months in total)
The Project is considered completed when the facilities are put into service(scheduled for March 2025).
(6) Project Implementation Structure1) Borrower: The President of India
2) Guarantor: none
3) Executing Agencies: Ministry of Railways (MoR), Dedicated Freight Corridor
Corporation of India Limited (DFCCIL)
4) Operation and Maintenance System: Indian Railways will possess the electric
locomotives, while DFCCIL will operate the electric locomotives as well as
operate and maintain the tracks and the signal and communication system. It
is planned that Indian Railways will maintain the electric locomotives and work
to produce them on its own in the future. Therefore, the Project will also, by
the contractors, transfer rolling stock manufacturing technologies to engineers
at Indian Railways. In addition, DFCCIL plans to start hiring newengineers--including those on loan from Indian Railways--in 2019, as part ofits efforts to further bolstering the operational structure for putting the wholeline into service. The Ministry of Railways (MoR) of India has its own budget
separate from the national budget, leaving no significant financial concerns for
Indian Railways with regard to the procurement, possession, andmaintenance of electric locomotives.
(7) Environmental and Social Consideration/Poverty Reduction/Social Development
1) Environmental and Social Consideration(i) Category: A(ii) Reason for Categorization
The Project falls under one of the sensitive sectors (railway) and has oneor more sensitive characteristics under the Japan Bank for International
Cooperation Guidelines for Confirmation of Environmental and Social
Considerations, announced in April 2002 (“JBIC Guidelines”).
(iii) Environmental Permit
An environmental impact assessment (EIA) report was completed inAugust 2009 for Phase 1 and in December 2012 for Phase 2, althoughsuch a report is not required for the Project under Indian law.
(iv) Anti-Pollution Measures

The anti-pollution measures taken by the contractors during theconstruction work include anti-dust measures, the proper storage ofconstruction materials, and the use of low-noise equipment among otherabatement measures in accordance with the environmental management
plan. The noise mitigation measures after the railway section is put into
service will include installing soundproof walls in built-up areas asneeded.
(v) Natural Environment
The project area of Phase 1 is mainly farmland or unused land, and theroute will detour any wildlife preserve. Thus, the adverse effects of Phase
1 are expected to be minimal. The adverse effects of Phase 2 are also
expected to be minimal. Although a few portions of its project area arenear national parks, the new line will be constructed along the existing linein those portions, which will keep its impact on the natural environment toa minimum.
(vi) Social Environment
The broader project as a whole involves the acquisition of 5,966 ha ofland and the relocation of 3,515 households. DFCCIL compensates theaffected residents at the repurchase price and provides support
necessary for rebuilding their livelihoods in accordance with theMoR-approved resettlement plan, as well as the entitlement matrix thathas been revised under the new land acquisition law. All the proceduresfor land acquisition and resettlement will be completed by December
2017.
(vii) Other / Monitoring
During the construction work for the broader project, the executing
agencies will, through the contractors, monitor the noise and vibrationlevels, soil, air and water quality, borrow pits, and vegetation, as well as
the land acquisition and resettlement processes. After the facilities are put
into service, the executing agencies themselves will monitor the noise andvibration levels, soil and water quality.
2) Promotion of Poverty Reduction
None in particular3) Promotion of Social Development (e.g. Gender Perspective, Measure for
Infectious Diseases Including HIV/AIDS, Participatory Development,Consideration for the Person with Disability, etc.)
The Dedicated Freight Corridor Project, which includes the Project, involves
large-scale construction work that draws a huge number of construction
workers in a country that is vulnerable to HIV/AIDS infection. As such workers
will include many migrant workers who will live alone during the construction
work, a high risk of HIV/AIDS infection will be likely. For this reason, theconsultants will work with local NGOs to carry out occupational health andsafety activities, including HIV prevention, for construction workers. It is worth
adding that cooperation for such HIV prevention activities is provided for in thebidding documentation for contractors.
(8) Collaboration with Other Donors
None in particular(9) Other Important Issues
The Special Terms for Economic Partnership (STEP) were applied to thepreceding portions (Phases 1 and 2) of the Dedicated Freight Corridor Project, ofwhich the Project is a part. In these portions, Japanese technology was used in
the tracks, the signal and telecommunication system, and other components.
4. Targeted Outcomes(1) Quantitative Effects
1)

Performance Indicators (Operation and Effect Indicators)
Indicator

1. Operation rate (%)
2. Train mileage (bothdirections) (1,000 km/day)
Dadri - Rewari
Rewari - Vadodara
Vadodara - Mumbai Port
3. Number of trains (bothdirections) (/day)
Dadri - Rewari
Rewari - Vadodara
Vadodara - Mumbai Port
4. Traffic (million ton-km/day)
Dadri - Rewari
Rewari - Vadodara
Vadodara - Mumbai Port
5. Maximum speed (km/hour)
6. Transportation time (hour)
Dadri - Rewari
Rewari - Vadodara
Vadodara - Mumbai PortBaseline(Actual Value in 2007)

Target (2027)[Expected value 2 years
after project completion]
93－24279
97

148
1,876
510

3259
41

181,741
218

4381
55
75

242,342281
100

537
172157(The baseline figures for the Rewari-Vadodara section have been updated from thoseat the time of preparing the ex-ante evaluation sheet for Phase 1.)2) Internal Rate of Return
Based on the conditions indicated below, the economic internal rate of return(EIRR) of the Dedicated Freight Corridor Project as a whole will be 20.00
percent, and its financial internal rate of return (FIRR) will be 4.31 percent.
[EIRR]
Cost: Project cost (excluding tax), operation and maintenance expenses
Benefit: Reductions in the marginal freight transport cost (compared with theexisting lines and roads), transportation time, etc.

Project Life: 30 years[FIRR]
Cost: Project cost, operation and maintenance expenses
Benefit: Revenue from freight charges
Project Life: 30 years(2) Qualitative Effects
Satisfaction of the freight transport demand, streamlined logistics networks withshorter transportation time, and broader economic development associated withincreases in the gross regional domestic product of the states where the section
to be built under the broader project is located.
5. External Factors and Risk Control

An appropriate employment plan is developed, and an appropriate plan for humanresources development is formulated and implemented.

Freight charges, which constitute a key revenue source of the Dedicated FreightCorridor Project as a whole, are set at appropriate levels compared with othermodes of transportation, especially truck transport.

6. Lessons Learned from Past Projects
The ex-post and other evaluations of the Metro Manila Strategic Mass Rail TransitDevelopment Project (I), (II), and (III) in the Republic of the Philippines indicate thatwhen a public enterprise implements a Japanese ODA Loan project and takes chargeof the operation and maintenance aspects as well, special attention should be paid to
its financial sustainability and that comprehensive assistance is needed to support theenterprise in improving its finances and streamlining its management. Learning fromthese lessons and taking note of the World Bank’s support for DFCCIL in formulating
its business plan, the Dedicated Freight Corridor Project, of which the Project is a part,plans to conduct an incidental technical cooperation project and make suggestions on
how to improve and strengthen both the organizational structures and the operationand maintenance plans to Indian Railways, DFCCIL, and the MoR.
7. Plan for Future Evaluation(1) Indicators to be Used
1) Operation rate (%)2) Train mileage (both directions) (1,000 km/day)3) Number of trains (both directions) (/day)
4) Traffic (million ton-km/day)
5) Maximum speed (km/hour)6) Transportation time (hour)(2) Timing
2027 (two years after the section is put into full service)