The World Bank Eastern Dedicated Freight Corridor-3 (P150158) REPORT NO.: RES42540 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF EASTERN DEDICATED FREIGHT CORRIDOR-3 APPROVED ON JUNE 30, 2015 TO DEDICATED FREIGHT CORRIDOR CORPORATION OF INDIA TRANSPORT SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Regional Director: Guangzhe Chen Practice Manager/Manager: Shomik Raj Mehndiratta Task Team Leader(s): Sanjeev Deorao Moholkar, Atul Agarwal, Martha B. Lawrence The World Bank Eastern Dedicated Freight Corridor-3 (P150158) ABBREVIATIONS AND ACRONYMS Abbreviation Description APL Adjustable Programmatic Loan DFC Dedicated Freight Corridor DFCCIL Dedicated Freight Corridor Corporation of India, Ltd. EDFC Eastern Dedicated Freight Corridor IBRD International Bank for Reconstruction and Development IR Indian Railways JICA Japan International Cooperation Agency MOR Ministry of Railways PDO Project Development Objective WDFC Western Dedicated Freight Corridor The World Bank Eastern Dedicated Freight Corridor-3 (P150158) BASIC DATA Product Information Project ID Financing Instrument P150158 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 30-Jun-2015 30-Nov-2021 Organizations Borrower Responsible Agency Railway Board, Ministry of Railways Dedicated Freight Corridor Corporation of India Limited Project Development Objective (PDO) Original PDO The PDO for EDFC3 is to: (a) provide additional rail transport capacity, improved service quality and higher freight throughput on the 401 km Ludhiana- Khurja section of the EDFC; and (b) develop the institutional capacity of DFCCIL to build, maintain and manage the DFC infrastructure network.     OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-85130 30-Jun-2015 21-Oct-2016 16-Feb-2017 30-Nov-2021 650.00 175.47 474.53 The World Bank Eastern Dedicated Freight Corridor-3 (P150158) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Background 1. Indian Railways (IR) has seen the growth of freight traffic stymied on the “Golden Quadrilateral” -- linking Mumbai in the west, Delhi in the north, Kolkata in the east, and Chennai in the south – by a shortage of infrastructure capacity and by the prioritization of passenger trains over freight trains. To provide additional capacity, specifically designed for freight, Ministry of Railways (MOR) has approved the construction of dedicated freight lines, which are expected to transform freight logistics in India by offering a previously unavailable, climate friendly alternative to road transport. 2. These freight corridors are being built and will be operated by the Dedicated Freight Corridor Corporation of India Limited (DFCCIL) which is a corporation under MOR. It is currently constructing two corridors. The Eastern Dedicated Freight Corridor (EDFC) is financed by the World Bank and will link Ludhiana through Delhi towards Mughalsarai and Kolkata. The Western Dedicated Freight Corridor (WDFC), financed by the Japan International Cooperation Agency (JICA), will link Mumbai and Delhi. The Map 1 below shows the corridors. The World Bank Eastern Dedicated Freight Corridor-3 (P150158) Map 1: Eastern and Western Dedicated Freight Corridors 3. The EDFC project is being financed through a series of investment loans 1. The overall Program Objective is to “meet the growing freight and passenger demand on the eastern corridor (Ludhiana-Delhi-Kolkata) with an improved level of service; and develop institutional capacities of DFCCIL and IR to build and operate the DFC network”. Each project covers a different section of the line: (i) EDFC 1 (P114338; approved in 2011 and closed in May 2019) comprises of Khurja –Bhaupur2 section (343 km); the Khurja – Dadri section (46 kms) was later added in 2015 through restructuring. (ii) EDFC 2 (P131765; approved in 2014) includes the Kanpur – Mughal Sarai section (393 km). After the EDFC 1 project closed in May 2019, the unfinished contracts related to Khurja-Bhaupur were transferred to EDFC 2 project. Due to the pending social issues, the Khurja-Dadri section has not been shifted to EDFC 2 as of now. (iii) EDFC 3 (P150158; approved in 2016) includes the Khurja – Ludhiana section (401 km). Each project reflects the Program Objective and has a Project Development Objective (PDO) that is specific to the line section financed by the project. II. DESCRIPTION OF PROPOSED CHANGES 1 The EDFC Program was originally conceived as an Adaptable Program Loan (APL) but the Bank was no longer using APLs by the time the later projects were approved. 2 Bhaupur and Kanpur are the same locations. The World Bank Eastern Dedicated Freight Corridor-3 (P150158) 4. The Ministry of Finance, Department of Economic Affairs has sent a letter No. F. No. 02/01/2007-Infra & Rural dated June 19, 2020, requesting for: (i) Cancelation of US$ 90 million out of US$ 650 million from EDFC 3 Project. 5. The cancellation is on account of loan savings due to exchange rate fluctuation and other scope (eg. TPWS) for which the procurement process has not yet started. The existing and revised loan allocation across the various categories included in the loan agreement would be as below; Amount of Loan Allocated (USD) Category Existing Proposed (1) Goods and works (other than those for signals, telecommunications and electrical works), non 509,000,000 440,375,000 consulting services, consultants' services and Training for Component A of the project (2) Goods, works for signals, telecommunications and all 121,375,000 100,000,000 electrical works under Component A of the project (3) Goods, non-consulting services, consultant's services and 18,000,000 18,000,000 Training under Component B of the project (4) Front end fees 1,625,000 1,625,000 TOTAL AMOUNT 650,000,000 560,000,000 6. While agreeing for the cancelation, the Ministry of Railways vide their letter No. 2016/Infra/6/22 dated June 16, 2020 to DEA has mentioned that MOR is agreeing to surrender the US$ 90 million from EDFC 3 subject to the condition that additional loan amount, if required at a later stage for the project, will be arranged by the Ministry of Finance, Government of India. 7. It is noted that even after the subject cancelation, the remaining funds are sufficient to meet the expenditure towards the contracts (2 civil works and 2 systems packages) that are committed and being financed under the project. 8. The current PDO and IP ratings are “Moderately Satisfactory” and “Moderately Unsatisfactory” respectively. On account of this proactivity, the proposed cancellation would likely improve the project ratings. III. SUMMARY OF CHANGES Changed Not Changed Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ The World Bank Eastern Dedicated Freight Corridor-3 (P150158) Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' S REQUEST IBRD- Disburs 650,000,000.0 560,000,000.0 USD 90,000,000.00 19-Jun-2020 FOR 85130-001 ing 0 0 COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES The World Bank Eastern Dedicated Freight Corridor-3 (P150158) Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-85130-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: GDS WKS NON CS TRNG COMP A 509,000,000.00 172,950,536.75 440,375,000.00 67.00 67.00 iLap Category Sequence No: 2 Current Expenditure Category: Gds,Wks sig, telecom, elec COMP A 121,375,000.00 888,337.93 100,000,000.00 50.00 50.00 iLap Category Sequence No: 3 Current Expenditure Category: Gds,Non CS, CS, Trng COMP B 18,000,000.00 0.00 18,000,000.00 100.00 100.00 Total 648,375,000.00 173,838,874.68 558,375,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 0.00 0.00 2016 20,000,000.00 0.00 2017 60,000,000.00 18,897,330.00 2018 160,000,000.00 28,568,926.00 2019 280,000,000.00 51,192,594.00 2020 100,000,000.00 74,516,834.00 2021 30,000,000.00 170,000,000.00 2022 0.00 216,824,314.00 2023 0.00 0.00 . The World Bank Eastern Dedicated Freight Corridor-3 (P150158)