Indian Railway Finance Corporation (IRFC) and the Asian Development Bank (ADB) signed an agreement for the provision of a USD 750 million loan for electrification works on 3,378 kilometers of existing railway lines. The electrification which will enable the migration of passenger and freight traffic from diesel to electric traction. The electrification assets will be leased to Indian Railways, the country’s national railway system, under a long-term lease agreement.
The project is part of a broad modernisation program that will help India’s railway sector transition to electric power and away from dependence on fossil fuels.
With the signed loan agreement, risk participation agreements were signed with private risk participants for the project.
“This is a flagship project demonstrating ADB’s strategy of supporting key state-owned enterprises in strategic sectors. It also reflects a major push by the private sector operations of ADB into transport infrastructure, and particularly railways, a sub-sector in which traditionally such operations have not contributed a great deal,” said ADB Vice-President for Private Sector Operations and Public–Private Partnerships Mr. Diwakar Gupta.
The Government of India has placed significant emphasis on investing in infrastructure, and has developed a 5-year, USD 132 billion capital expenditure program for the modernisation of Indian Railways. The programme comprises network expansion and decongestion, enhancement of safety and passenger amenities, development of dedicated freight corridors, station redevelopment and procurement of rolling stock and other related assets. The electrification of railway tracks is part of this master plan, which is critical for the movement of goods and people within the country.