Sunday, January 15 2006 16:26 Hrs (IST) - World Time -

New Delhi:: The launch of the ambitious Rs 60,000 crore 'Dedicated Freight Corridor Project' would be one of the main highlight of the 2006-07 Railway Budget to be presented by Rail Minister Lalu Prasad Yadav.

RITES, a Public Sector Undertaking (PSU), was asked to conduct the feasibility study of the project and has submitted its draft proposal to the Rail Ministry, high-level ministry sources told sources when asked about the status of the Corridor.

"RITES has given its draft report on the Dedicated Corridor on which the Railway Board has given its opinion. It is being sent to the Planning Commission for a final view", they said, adding that once cleared by the Commission work on it will commence.

The much awaited project is likely to be included in the budget 2006-07, they said.

The proposal for the Dedicated Freight Corridor has already been cleared by the Planning Commission and the Infrastructure Committee headed by Prime Minister Manmohan Singh.

It was also included in the mid-term proposal of the Tenth Five Year plan following which RITES, under the Rail Ministry, was asked do a feasibility study.

Japan, during the visit of its Prime Minister Junichiro Koizumi last year, had agreed to invest Rs 20,000 crore in the first phase of the Corridor the 2,800 km Delhi-Kolkata and Delhi-Mumbai section.

The Corridor, along the Golden Quadrilateral, is expected to connect the four metros and the major ports of the country. Work on the other sections Kolkata-Mumbai, Kolkata-Chennai, Chennai-Mumbai and Delhi-Chennai was planned in the second phase, they said.

However, later conditionalities put by Japan on the loan has put the Railways in a tight spot and it has decided to look to financial institutions, including World Bank and Asian Development Bank.

In lieu of the Rs 20,000 crore soft loan on interest of 0.45 per cent, the Japanese wanted 30 per cent of the work to be done by their own companies in addition to technical assistance, a condition unacceptable to India.

The condition was considered too harsh by the Railway Ministry and also by the Planning Commission, which has been closely monitoring the project.

According to sources, the Centre has asked Government Japan to reconsider its conditionalities.

The Railways had planned to complete the Corridor in the next five to seven years, but Rail Ministry sources said the project might get delayed owing to the disagreement over conditionalities imposed by Japan on funding the project.