THEBLUEPRINT

FOR

INDIANRAILWAYS

(Background,TermsofReference&Methodology)

Submittedby

G.V.L.SatyaKumarExecutiveDirector(PerspectivePlanning)

March31st2017

INDEX

BACKGROUND,TERMSOFREFERENCEANDMETHODOLOGY

EXECUTIVESUMMARY(i)–(cxxxiii)

FOREWORD 1‐37

PARTI‐STATUSOFTHEDFCPROJECT–CONSTRUCTIONASPECTSANDTHEWAYFORWARD

1 BackgroundoftheDFCProject 39

2 FinancingPlan 45

3 ContractualProvisionsandBasicDesignfeatures 47

4 LandAcquisitionStatus 51

5 StatusofAwardofContracts 606 CurrentOverallStatusofEDFCandWDFC 66

7 CurrentStatusofMajorActivitiesofCivilWorkPackage 69

8 StatusofContractwisePhysicalWorkprogress 74

9 Deploymentofmachineryandmanpower 81

10 ProgressoftheDFCprojects(basedonPMCReports) TheS‐Curves 85

11 Capex–asanindexofprogress 95

12 Thekeyissues–

(i)ContractualUnderachievement;(ii)DesignBuildMode;(iii)RoleofPMC;(iv)ChoiceofPMCs;(v)Leadership;(vi)ERPanditsneed;(vii)IntegratedPlanning;(viii)AlignmentMechanism;(ix)Moreon“Time‐SpaceDiagrams”;(x)Eco‐systemforOpenMinds;(xi)CasestudyofGCBmodernizationatVisakhapatnamPort;(xii)Issueswithstategovernments.

104106107107107107108113131134134140

TheWayForward 144

PARTII‐STATUSOFTHEDFCPROJECT–ThePricing,Operations,MaintenanceandtheSafetyframework(POMS)

1 PricingFramework–TheTACStatus 1472 TheOperationsFramework‐Status 1493 TheMaintenanceFramework‐Status 1694 TheSafetyFramework‐Status 169PARTIII–ESTIMATIONOFRELEASEDLINECAPACITYONINDIANRAILWAYNETWORK

1 TransformandTransferratiosandsectionsofrelease 1742 TrafficdensityalongHDNcorridors 1773 TrafficDensityalongtheEasternandWesterncorridors 1854 EstimationofreleasedLineCapacityonEasternandWesternCorridors 190PARTIV ‐CAPACITYUTILIZATIONOFINDIANRAILWAYNETWORKAFTERCOMMISIONINGOFTHEDFCs

A‐PASSENGERDEMANDandVALUE1 GeneraldiscussiononPassengerBusinesssegmentonIndianRailways 2062 PassengerDemandAnalysis–I:PRS,UTSandSuburban 2123 PassengerDemandAnalysis–II:CivilAviationODs 256B‐PROFITABILITYandVALUEMAXIMIZATION4 PricingandProfitability 2685 BriefreviewofcostingonIndianRailway 2726 CostAnalysisoftypicalpassengerservices 2797 Coachrelatedcosts‐strategies 2838 ManpowerCosts‐strategies 2949 TerminalCosts‐strategies 30010 “ClosingtheLoop” 31011 RationalizationofZonalAdministrations 33512 TractionCosts‐Strategies 338C‐SPEEDS&QUANTUMLEAPS13 ACriticalAnalysisofSpeedsofPassengerTrainsonIndianRailways 34114 AnotherRationalefor“HubandSpoke”Model 35315 A “BackOf Envelope” comparative calculation ofOATbyRail andby

Air353

16 BalancingSpeedsofTrainsandElementsofSpeedUpgradation 35617 ProjectMonitoringandProjectPlanningTools– AReview 36018 ACasefor“TwinPlanningToolKit”– ALongRangeOneandAWork

ManBee370

19 FormFollowsFunction–AProposedPlanningOrganization 37120 LeveringonInternationalCo‐operation 373

D–COACHINGSTOCKAVAILABILITY21 CurrentHoldingofCoachesonIndianRailway 37422 AgeProfileOfCoaches 37923 ProductionPatterninpast4years 38124 ProductionPlansforNextFourYears 384E‐OTHERPRICEPERFORMANCEMETRICS:THE5Ms25 ReliabilityandSafetyonIndianRailways 38826 NormalizationofDevianceandNASA 40127 NormalizationofDeviance–ACasestudyofSPAD 40228 LimitationofDataAnalytics:“Closingthe“Loop” 40529 “ClosingtheLoop”–RedefiningtheProcesses 40930 AFormalDiscussionon“ClosingtheLoop” 41231 Equipment Failures and Unsatisfactory Features – Need for Systems

Thinking421

F‐TERMINALS–THEKEYTOFUTUREGROWTH32 EvidenceforTerminalCongestion 43033 TerminalsandWayForward 43534 CaseStudyofKanpurArea 44035 ImplementationStrategy 45136 ConstraintsofPitLines 45237 PAPD/PDPAprocessesatTerminals 45738 Progress of Capital Expenditure works – Coaching Terminals and

CoachingFacilities459

G‐PRIVATECOACHINGTERMINALSANDTRAINS– AConceptwhoseTimehascome!39 PPPsandtheir“Rainbow”Spectrum 46540 ElementsofPPPModel 46741 AnIllustrativeCasewithNumbers 46942 WayForwardandImplementationStrategy 471H‐THEWAYFORWARD473PARTV:CAPACITYUTILIZATIONOFDFCsafterCommissioningoftheDFCsA‐DFCs–AnOpportunityforUnprecedentedFreightGrowth1 OriginalTrafficJustificationofDFCs 4762 Currentscenario 4843 LongTermtrendsinOriginatingFreightonIndianRailways 4874 RailwayFreightandIndianEconomy–RecentTrends 4885 DFCsinIndianRailwayContext 5076 MarketshareandOpportunities 513

B–PricingofFreight7 PricingandCostingofRailwayFreightTraffic 517C‐Speeds,ReliabilityandAvailability 8 CaseStudyofWaltairDivision 569

PARTVI:CAPACITYUTILIZATION–AStrategic,IntegrativeandTransformativeInitiative

1 IndianRailway:Leversforgrowth 6962 Strategies/Initiatives 6983 ImplementationPlans 7004 Delivery framework – Customer‐ Operation‐Strategy(C‐O‐S)

frameworks742

D–IntegratedMarketingandBusinessDevelopment

9 CaseStudyof“AutoVision”onSouthernRailway 619

E–Deconstructingthe“MindofourFreightCustomer”10 AcasestudyofhowSAILchoosesitsPortsandRailways 648F–TerminalDevelopmentandPartnerships– KeytoFreightBusinessGrowth652 G‐RollingStockandInnovationinCarryingUnits 669 H‐PPPsonfixedinfrastructure– KeytofreightBusinessGrowth693 ITheWayForward

Background,TermsofReferenceandMethodology

Hon’ble Minister for Railways in his Budget Speech of 2016‐17 had proposedMission:CapacityUtilizationasoneamongsttheseveninitiatives,aimedatundertakingthekeyprioritiesofIndianRailwaysina“Mission‐Mode”. Withthetwodedicatedfreightcorridors(DFCs), scheduled for commissioning by 2019, it was proposed by the Hon’bleMinister therein to prepare aBLUEPRINT formaking full use of the huge new capacitygeneratedbothontheDFCsandontheIndianRailwaynetwork–nosoonerthantheDFCsarecommissioned.

Vide O.O. No. 21 of 2016/O&M/6/4 dated 29th April 2016, ExecutiveDirector/Perspective Planning of the Railway Board had been appointed as theMissionDirectorfortheMission:CapacityUtilization.ThetermofreferencearedrawndirectlyfromthefollowingextractsoftheHon’bleMR’sBudgetSpeechof2016‐17:‐

(Para121oftheBudgetSpeechof2016‐17)

“(g) Mission Capacity Utilization : The two Dedicated Freight Corridors(DFCs) arescheduled to be commissioned by 2019. These would create huge capacity forcarrying freight traffic betweenDelhi‐Mumbai andDelhi‐Kolkata. Shifting of goodstrain from existing tracks to the new corridors, would also release a great deal ofcapacitywhichwouldhelpupscale thenatureofpassengerserviceson these trackroutes.ItisthusproposedtoprepareaBLUEPRINTformakinguseofthishugenewcapacity,nosoonerthanitiscommissioned.”

The progress of this report was tracked thereafter on the e‐Drishti portal and thereportTHEBLUEPRINT–issubmittedonthisdaythe31stofMarch,2017.

Currently, the two Dedicated Freight Corridor projects (DFCs) – the Eastern andWesternCorridors–spanningatotal lengthof3360Kilometersareunderconstruction,withatotalcapitalexpenditureofRs.81549Cr.Thetwocorridorsarethe1856routeKmEasternCorridor, starts fromDankuni inWestBengalandpassingthroughtheStatesofJharkhand,Bihar,UttarPradesh(UP)andHaryanatoLudhianainPunjabandalsoincludesastretchfromKhurjatoDadriinUPandthe1502routeKm,WesternCorridor,startingfromDadriinUPtoJawaharlalNewPortTrust(JNPT)inMumbaiandtraversingthestatesofUP,Haryana,Rajasthan,GujaratandMaharashtra.

The planning and development, maintenance and operation of the DFCs is being

executed byDFCCIL‐ Dedicated Freight Corridor Corporation of India Limited – specialpurposevehicle(SPV)setupundertheadministrativecontroloftheMinistryofRailwaysandincorporatedon30thOctober,2006undertheCompaniesAct,1956.

TheProjectisstructuredatadebt‐equityratioof3:1.Whilethedebtcomponentonthe1504KmWesternCorridoristhroughasoftloanfromJICAof Rs.38,722cr,thedebt‐fundingofEasternCorridorof1840Kms is throughdifferentmodes–65%i.e.1183KmthroughWorldBank;29%i.e.538KmthroughPPPmodeandremaining6%i.e.118KmsthroughinternalfundingofIndianRailways.

So far 91%of landhadbeen acquired overall (i.e 20FNotification issued ‐ 95.87%excludingthePPPportion).ThephysicalandfinancialprogressoverallasonJanuary31st2016is38.9%and36.6%respectively(asreportedbyM/sDFCCIL).ThedetailedreportonthestatusoftheDFCprojectispresentedinPartIandPartIIofthereport.

InadditiontothesetwoDFCs,Hon’bleMRinthesamebudgetspeechof2016‐17hademphasizedtheneedtobuildmoreDedicatedFreightCorridors.

“Para21oftheBudgetSpeechofHon’bleMR.21. Giventheemphasisonrapidexpansionoffreightbusiness, it isessentialtobuild more dedicated freight corridors for increased traffic with consequent

benefits for the economy and the environment. It is proposed to take up thefollowingfreightcorridors:North‐South(NS)connectingDelhitoChennai;East‐West(EW) Corridor connecting Kharagpur to Mumbai and East Coast(EC)CorridorconnectingKharagpurtoVijayawada. Itisproposedtoputthesethreeprojects onhighpriority to ensure structuring, award and implementation in atime‐boundmannerthroughinnovativefinancingmechanisms,includingPPPs.”

Towards this end, M/s RITES has submitted PETS (Preliminary Engineering and

TrafficSurvey)reportsforNS,EWandECCorridorsbyFebruary,2016. InJune,2016tofast track the process, Hon’ble MR had constituted a Committee of ExecutiveDirectors(EDs) in the Railway Board to examine these PETS reports and to submit itsrecommendationtotheBoard.TheCommittee,thereonsubmitteditsrecommendationtotheBoardon15thSeptember,2016. AcopyoftheEDCommittee’sreportisappendedasAnnexure1.TheBoarddeliberatedonthereporton21stFebruary2017anddecidedtogoaheadwiththealreadysanctioned3rdlineworksonthecorridors,buttoconstructthematDFCstandards.Boardhadalsodecidedtoaugmentthe3rdlinewith4thlines,asandwhennecessary.

It is in this background of the status of the DFC projects, that theBLUEPRINT forcapacityutilizationaftercommissioningoftheDFCsisbeingpresented.

Methodologyadopted

The methodology towards preparing the BLUEPRINT involved extensiveinteractions with functionaries of the industry and with sections of travelling public;discussionswithRailwaypersonnelandpersonnelofrelatedMinistries;analysisofdataandreportssourcedfrommultipleagencies–CRIS(PRS,UTS,suburbandata,FOISdata–OD, Terminal detention‐loading, unloading, Train Examination data);Ministry of CivilAviation (OD data); Zonal Railways(Line Capacity Statements); SafetyDirectorate(Safety Information Management System Data); Traffic TransportationDirectorate(Restriction on Terminals);CoachingDirectorate (Train Composition Data,Pit line Data); Statistics and Economics Directorate(Annual Statistical statement);Summary of End results – freight and Coaching; Personnel andManpower PlanningDivision of Railway Board (Manpower data); DFCCIL (Market Reports; MCDOs; PMCsreport;CPMsConferenceReports);MechanicalDirectorate(CoachstatusandProductionplan);FinanceDirectorate(RevenueExpenditureandCapitalExpendituredata).

Theauthoralsoleveragedextensivelyonhisownprofessionalexperienceofhavingworkedforoverfifteenyearsindifferentfunctionalareasof IndianRailwaysandfor fiveyearsintheShippingsector,asDeputyChairman/ChairmanofVisakhapatnamPortTrust.The professional experience on Indian Railways included work in the functions ofOperations,Marketing, Commercial, Safety,AccountingReforms, IT, Planning at differentlevelsinDivisionsandZonesofSouthern,South‐Western,EastCoast,CentralRailwayandintheRailwayBoard.AbriefresumeoftheAuthorisinAnnexure2.