CIL SPVs to invest Rs 8,000 crore to develop two rail links

Coal India Ltd. has formed two special purpose vehicles (SPVs) to develop two railway links for evacuating increased quantity of coal from high-yielding open-cast mines of its Chhattisgarh-based subsidiary South Eastern Coalfields (SECL).

The two SPVs, Chhattisgarh East-West Railway (CEWRL) and Chhattisgarh East Rail (CERL), will construct the 135-km east-west rail corridor and the 136-km east rail corridor at an estimated cost of Rs 4,970 crore and Rs 3,055 crore, respectively.

CERL has already been made operational.

The joint venture partners in CEWRL include SECL and the coal ministry with a 64% stake and Ircon with a 26% stake. Chhattisgarh State Industrial Development has also chipped in with a 10% stake. CERL also has the same partners with the same pattern of holding.

In a statement, CIL said two large value tenders for the construction of the 135-km rail line by CEWRL from Gevra Road to Pendra Road has recently been floated.

Ircon, the construction arm of the Indian Railways, which is executing the project, has floated the tenders after the SBI-led consortium of six banks — lenders to this rail corridor — released the lender’s confirmation notice (LCN) for Rs 400 crore as the first disbursement in September first week. Engineering plans for CEWRL were already in place and now with finance tied up, the tenders have been floated.

The east-west corridor also includes a single rail line of 16 km from Urga to Kusmunda and feeder lines of around 35 km in the region. The 135-km Gevra Road to Pendra Road is a double line.

“The east-west line will have the capacity to move around 65 million tonne coal per annum from Mand-Raigarh and Korba coalfields of SECL benefitting power plants in western and northern India,” a senior CIL executive said, adding: “This rail project is anticipated to be completed by 2023.”

CIL has planned the two major lines concomitantly with the development of Mand- Raigarh Coalfields.

The east-west corridor is funded on a debt-equity ratio of 80:20, whereas the total equity is Rs 994 crore with the debt amount being Rs 3,976 crore. The cost of equity is borne as per the shareholding pattern of the SPV.

Of the debt portion of Rs 3,976 crore, SBI will be financing Rs 1,714 crore, Punjab National Bank, Bank of Baroda, Canara Bank and Union Bank of India Rs 476 crore each. Indian Bank will finance Rs 358 crore.

A 44-km rail line of east rail corridor from Kharsia to Korichapar constructed by CERL has turned operational from October 2019. This line will extend to Dharamjaigarhand finally till Korba. CERL’s project will have an evacuation capacity of 35 million tonnes per annum. Both the rail lines will reduce the saturated load of Howrah- Mumbai rail line.