Railways rule out renegotiation of high-speed train loan amid rising costs

Amid growing concerns over escalating costs of the Mumbai-Ahmedabad bullet train project, the railways said on Friday that there had been no renegotiation of its terms and conditions with the Japanese agency. which finances 81% of the total cost of the project.

The high-speed rail network is estimated at Rs 1.1 trillion, including the purchase of 24 trainsets, interest during construction and import duties.

The Japan International Cooperation Agency (JICA) is financing 81 percent of the total cost of the project, through a loan.

The National High Speed ​​Rail Corporation Limited (NHSRCL), the executing agency of the project, acquired 60 percent of the land (about 77 percent of the land in Gujarat, 80 percent in Dadar Nagar Haveli and 22 percent in Maharashtra) necessary for the project. which has a deadline of December 2023.

However, the NHSRCL had to contend with issues ranging from protests by landowners to the rising cost of the project due to the widening gap between the Indian rupee and the Japanese yen, resulting in a significant increase in costs.

In an interaction with online media, the Chairman of the Railway Council, VK Yadav, agreed that there would be an increase in the cost of the project, but denied that there was a renegotiation of the loan. with JICA.

“Yes, there is an escalation in costs, but now is not the right time to review costs. This will be done when we finalize the tenders. As in any project, we finalize the estimated cost based on the historical cost. But the real cost is only known when the tenders are issued. This is when we get to know the cost of the project, ”he said.

Yadav said that due to the Covid-19 situation, the land acquisition process has experienced delays and that by this fiscal year the process will be completed. He said physical work on the project will begin after the acquisition of 90 percent of the land.

Tenders have also been issued for nine lots so far, he added.

“I want to confirm that there is no renegotiation regarding the terms and conditions of the loan,” Yadav said.

“When it comes to escalating costs, in any project, regardless of the estimated cost, when the job is done and when the job is done, there’s bound to be some increase in cost either because of the escalation. costs, because of inflation or because of a design change, ”he said.

Speaking at an event last week, Minister of Railways Piyush Goyal said the financial aspect of the ambitious high-speed train project between Mumbai and Ahmedabad was under review as the world post -Covid will cause “a lot of belt tightening”.

Speaking at India Global Week, the minister said, however, that the railways were “engaged in these projects” and that “we are at the stage of finalizing plans and costs” for them.

“Certainly the Covid-19 was a little key in terms of the ambitions we had around the high-speed train project and we are reviewing all the projects at the post-Covid world level which will lead to a lot of tightening of the belt, a lot of reducing costs and improving our efficiency and aligning ourselves with the way travel and transport will work in the world after Covid, ”Goyal said in response to a question on the status of the ambitious project.

“I really think it’s going to be a pre-Covid and post-Covid affair,” he said.

Sources indicate that talks are underway with Japan to determine whether Indian companies can take on some of the highly specialized engineering work, modeled on “Make in India”, and to reduce the cost of the project.

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