The Indian Railways may obtain the support of state-owned Rural Electrification Corporation (REC) to fund its ambitious plan to electrify the entire network by 2021-2022. The corporation is likely to lend the railways the entire project cost of around Rs 300 billion (EUR 3.9 billion), spanning over four or five years, at an annual interest rate of 9% for a lending period of 8-10 years, a top railway ministry official said.
Nearly half of the railway tracks in the country have been electrified so far. The Indian Railways will be spending almost Rs 80 billion (EUR 1.06 billion) every year towards electrification of the rest of the network for the next four years. Railway Minister Piyush Goyal recently met top REC officials and discussed the funding for the electrification project, the official added.
“The railways has prepared a Rs 350 billion (EUR 4.6 billion) plan to electrify its remaining 33,000 km network in another four years. However, the minister is of the view that we can reduce the cost by 20-25% by giving out large contract sizes and standardising the designs. He has already instructed officials to work on it,” the official said.
“We will easily be able to pay off the entire loan within a period of 8-10 years from our savings. For REC also, it will be a good investment as these are all high traction projects. As soon as a line becomes operational, the savings would start immediately,” the official said.
The Indian railways will also involve other state-run organisations such as IRCON, RITES and PGCIL, along with several private companies, to implement the 100% electrification plan.
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