NITI Aayog finds serious cost underestimations in Silver Line Project

NITI Aayog has also found that the land acquisition costs in the detailed project report (DPR) of ambitious project Semi High-Speed Rail Corridor (Silver Line) is also underestimated
NITI Aayog finds serious cost underestimations in Silver Line Project

Even before the Kerala government set in motion the land acquisition process for Silver Line Project, NITI Aayog has informed Kerala that the project’s basic concept was “incorrect,” and its estimated cost was a vast underestimation. It seems that the government’s decision to go ahead with preliminary steps of its prestigious Semi High-Speed Rail Corridor (Silver Line) project itself is questionable.

In reality, the project cost would be more than double the estimated cost of Rs 67,000 crore. It seems that the project would cost nearly around Rs 1.33 lakh crore. NITI Aayog has also raised serious concerns about the funding model of the project.

As far as significant infra or railway projects are concerned, NITI Aayog’s sanction is not necessary. But its recommendations form a vital part in decisions taken by various ministers of the Union government.

On September 30, NITI Aayog, in a detailed note sent to Kerala, stressed on ‘mixed traffic’ design proposed for the Silver Line project. They claim that severe infrastructure specifications are needed to serve more transportation demands. It adds, “It will render the cost extremely prohibitive.”

Besides, the two services are also not compatible. The freight trains have low average speed. So, the affordability of the passenger segment would be very low. It is nearly impossible to balance commercial interests and operational efficiency. Therefore, the viability of the Silver Line Project is a big doubt.

The transportation of goods along the corridor will cost a massive amount since there is no interoperability between the Silver Line and the Indian Railway (IR). Transhipment terminals will have to be constructed if goods have to be transferred on the IR track. The NITI Aayog note says, “This will make the transportation cost-prohibitive and defeat the very goal of cost-efficient freight transportation.”

According to NITI Aayog, the project’s proposed per-kilometre cost is Rs 120.77 crore, which is “severely low compared to similar projects.” They also claim that the Silver Line project’s per-km cost should be higher than even Rs 250-300 crore. If the per-km price is fixed at Rs 250 crore, the project cost for the proposed 529.45 km line would be Rs 1.33 lakh crore.

They have also found that the land acquisition costs in the detailed project report (DPR) is also underestimated. Moreover, NITI Aayog has expressed doubts about the ability of the Ministry of Railways (MoR) to provide equity investment.

Even before NITI Aayog’s remarks, the screening committee of the Department of Economic Affairs, Union Ministry of Finance, had rejected the Kerala government’s request to seek the financial assistance of Rs 33,699.80 crore from the Asian Development Bank (ADB).

However, according to V Ajith Kumar, the MD of Kerala Rail Development Corporation Limited (KRDCL), the Ministry has not asked them to drop the project. They have only rejected the request for an ADB loan that the government had made.

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