KOLKATA (miningweekly.com) - Mahanadi Railways, a joint venture (JV) dedicated coal transportation corridor project in the East Indian province of Orissa, would serve as a model for the federal government’s policy for participative rail connectivity and capacity augmentation, announced last year.

The $1-billion Mahanadi Railway project, one of the maiden independent coal freight corridors, was a JV between the Industrial Development Corporation of Orissa (IDCO) and Orissa Mining Corporation (OMC), two agencies operated by the provincial government of Orissa.

The dedicated corridor would entail construction of 163 km of rail link across the coal reserves in the Talcher region of the province and would also include building 385 minor and major bridges, six rail flyovers and seven coal loading yards.

The first phase of construction would start next year and would be completed by 2017, while the second phase was scheduled for completion by 2023.

This would form part of the Indian government’s initiative to develop nongovernmental railway models across the country to augment freight handling capacity through linking coal and iron-ore regions with trunk lines operated by the Indian government-owned and -managed monopoly, Indian Railways.

Under its new freight augmentation policy, the government had offered five generic models to encouraging private investments, including a nongovernment railway model; a JV model; a build, operate and transfer (BOT) model for railway projects, awarded through competitive bidding; a capacity augmentation-annuity model with provincial governments, local bodies, beneficiary industries and ports; and projects by infrastructure and logistic providers, according to the policy document.

Elaborating on the IDCO-OMC rail project, an official in India’s Railways Ministry said that the model was an ideal indicator of infrastructure investments by mining companies and, if policy guidelines were properly implemented, it could spur further investments against the backdrop of public-private partnerships (PPPs) in mining, similar to those proposed by Coal India Limited (CIL).

CIL was already negotiating PPP collaborations under Mine Development and Operations contracts with global miners like Rio Tinto, BHP Billiton and the Orissa rail project, which could be the model to attract mining infrastructure investments from foreign miners apart from direct mining projects, the official said.

Indian Railways (IR) touch the one-billion-ton-a-year freight mark, carrying 1.009-billion revenue-earning freight during 2012/13, which was, however, 15-million tons lower than forecast.

IR's ability to create new coal and iron-ore carrying capacity was severely limited by government resource constraints and it was imperative to find supporting investments from the mining sector considering that over 42% of railways freight constituted coal, followed by cement at 24%, iron-ore at 21% and steel at 14%, the official added.

OMC has mining leases across 35 locations in Orissa. The company controls reserves of 400-million tons of iron-ore, 19-million tons of manganese, 28-million tons of chrome ore, 220-million tons of bauxite and 19-million tons of limestone.