The World Bank For Official Use Only: Document of

Public Disclosure Authorized
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: PAD470
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED LOAN
IN THE AMOUNT OF
US$1,100 MILLION
TO THE DEDICATED FREIGHT CORRIDOR CORPORATION OF INDIA
IN SUPPORT OF THE
EASTERN DEDICATED FREIGHT CORRIDOR 2 (EDFC2) PROJECT
INVESTMENT PROJECT FINANCING - SERIES OF PROJECTS
March 1, 2014
Sustainable Development Department

India Country Management Unit
South Asia Regional Office
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without World
Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective May 20, 2013)
Currency Unit = INR
US$1.0 = INR55.00
FISCAL YEAR
April 1 - March 31
ABBREVIATIONS AND ACRONYMS

APL Adaptable Program Lending IHHA International Heavy-haul Association
ARTC Australian Rail Track Corporation IIFCL India Infrastructure Finance Company Ltd
CAS Country Assistance Strategy IR Indian Railways
CIL Coal India Limited IRB Indian Railway Board
CGFA Corp. Gov. and Financial Accountability IT Information Technology
CONCOR Container Corporation of India Limited. IUFR Interim Unaudited Financial Report
CPAR Country Procurement Assessment Report JICA Japan International Cooperation Agency
CPM Chief Project Manager LA Land Acquisition
CPSU Central Public Sector Undertaking LRDSS Long Range Decision Support System
CR China Railways M&E Monitoring and Evaluation
CW&T Civil Works and Track MMD Maximum Moving Dimensions
CVO Chief Vigilance Officer MOEF Ministry of Environment and Forests
DFC Dedicated Freight Corridor MOR Ministry of Railways
DFCCIL Dedicated Freight Corridor Corporation. MOU Memorandum of Understanding
DIR Detailed Implementation Review NRRP National Rehabilitation & Resettlement Policy
DPC Dedicated Passenger Corridor NGO Non-Government Organization
DPE Department of Public Enterprises PAD Project Appraisal Document
EA Environmental Assessment PAP Project Affected Person
ELI Existing Line Improvement PIO Public Information Officer
EMF Environmental Management Framework PS Performance Specifications
ERR Economic Rate of Return PP Procurement Plan
ERP Enterprise Resource Planning PPPs Public Private Partnerships
FIRR Financial Internal Rate of Return PWD Public Works Department
ERP Enterprise Resource Planning QSAC Quality and Safety Audit Consultant
FIRR Financial Internal Rate of Return RAA Railway Amendment Act, 2008
GAAP Governance and Accountability Action Plan RAP Resettlement Action Plan
GBS General Budgetary Support RDSO Research, Designs and Standards
Organization.
GDP Gross Domestic Product
GGM Group General Manager RFP Request for Proposal
GHG Greenhouse Gas RPF Resettlement Policy Framework
GM General Manager ROBs Road Over Bridges
GOI Government of India RS Rolling Stock
GPN General Procurement Notice RTIA Right to Information Act
GQ Golden Quadrilateral SEMU Social and Environment Management Unit
HR Human Resources SESMRC Social & Environment Safeguards Monitoring
and Review Consultants
HHC Heavy-haul Committee SHE Safety, Health and Environment
IBRD International Bank for Reconstruction and SIA Social Impact Assessment
Development SPN Specific Procurement Notice
IDC Interest During Construction ToR Terms of Reference
IGBT Insulated Gate Bipolar Transistor ZR Zonal Railway (a regional division of MOR)
Vice President: Philippe H. Le Houerou
Country Director: Onno Ruhl
Sector Director : John H. Stein
Sector Manager: Karla Gonzalez Carvajal
Task Team Leader: Benedict L. J. Eijbergen
Co-Task Team Leader(s): Atul Agarwal/Nupur Gupta
Table of Contents
I. STRATEGIC CONTEXT AND RATIONALE .......... 1.....................
A. Country Context ..................... 1..........................
B. Sector and Institutional Context ........... 1........................
C. Higher Level Objectives to which the Program and Project contribute............ 3
II. PROJECT DEVELOPMENT OBJECTIVES...................3... .......... 3
A. Program and Project Development Objectives.............3........3
B. Program and Project Beneficiaries ............................ 44....
C. PDO Level Results Indicators ............................... 44.....
III. PROJECT DESCRIPTION.....................4....... ............... 4
A. Project Components .................................... 44.......
B. Project Financing......................5....... ................. 5
C. Lessons Learned and Reflected in Program and Project Design.... ........... 5
D. Alternatives Considered and Reasons for Rejection .......... ........... 6
IV. IMPLEMENTATION ................... 6...........................
A. Institutional & Implementation Arrangements .................... 6
B. Results Monitoring and Evaluation .................. ........... 77....
C. Sustainability................... .............................. 7
V. KEY RISKS ....................................................... 7
VI. APPRAISAL SUMMARY ....................................... ..... 9
A. Economic and Financial Analysis of EDFC2 ........... 9..........9
B. Technical ............................................. ..... 1-14-0
C. Financial Management ............................... 1111.....
D. Procurement................. . ....................... ....... 12
E. Social (including Safeguards) . ........................... .......... 134-2
F. Environment (including Safeguards).................................. 14
Annex 1: Results Framework and Monitoring.................................... 16
Annex 2: Detailed Project Description .................................. ..... 18
Annex 3: Implementation Arrangements ...................................... 21
Annex 4: Operational Risk Assessment Framework (ORAF) ................... ..... 40
Annex 5: Implementation Support Plan....................................... 43
INDIA
EASTERN DEDICATED FREIGHT CORRIDOR 2(EDFC2) PROJECT
PROJECT APPRAISAL DOCUMENT

SOUTH ASIA
SASDT
Date: March 1, 2014 Lending Instrument: Investment Project Financing
Country Director: Onno Ruhl Sectors: Railways (100%)
Sector Director: John H. Stein Themes: Infrastructure services for private sector
Sector Manager: Karla Gonzalez Carvajal development (P); Other public sector governance
Team Leader: Benedict L. J. Eijbergen (S)
Project ID: P131765 Environmental category: A - Full Assessment
Project Financing Data

[X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others:
Total Bank financing (US$m): 1,100.00
Proposed terms:
Financing Plan (US $m)
Source Local Foreign Total
Borrower:
550.00 0.00 550.00
International Bank for Reconstruction and

Development: 1,100.00 1,100.00
Total: 550.00 1,100.00 1,650.00

Borrower: Dedicated Freight Corridor Corporation of India Limited
Responsible Agency:
Dedicated Freight Corridor Corporation of India Ltd.
5th Floor, Pragati Maidan Bldg Complex
Pragati Maidan
India 110001
Tel: (91-11) 2345-4732 Fax: (91-11) 2345-4770
md(a-,DFCCIL.in
FY FY15 FY16 FY17 FY18 FY19 FY 20
Annual 75 200 300 325 150 50
Cumulative 75 275 575 900 1,050 1,100
Project Implementation Period: 6 years

Expected effectiveness date: August 31, 2014
Expected closing date: December 31, 2019
Does the project depart from the CAS in content or other []Yes [X] No
significant respects?
Ref
1
Does the project require any exceptions from Bank policies? [ X ]Yes [No
Detailed in paragraph 17 of this project appraisal document
(PAD)
Have these been approved/ endorsed (as appropriate by Bank [ X ]Yes [ ] No

management?
Ref
Is approval for any policy exception sought from the Board? [ X ]Yes []No
Ref: Detailed in paragraph 17 of this project appraisal
document (PAD). To partially waive the provisions of
paragraph 8 of the Operational Policy 3.10 (Financial Terms
and Conditions of IBRD Loans, IBRD Hedging Products, and
IDA Credits) which provides that for all loan commitments,
IBRD charges a front-end fee on the overall amount of the
loan. This waiver is sought in respect of a portion of the front-
end fee payable to the Bank under the proposed IBRD loan to
India for the financing of the India Eastern Dedicated Freight
Corridor 2 project. The justification for the waiver for a portion
of the front-end fee is that it has unlocked $ 1 billion of tied up
IBRD loan funds by facilitating the cancellation of $1 billion
from the loan "India: Financing Public Private Partnerships in
Infrastructure through Support to the India Infrastructure", as
approved on December 12, 2013 (R2013-0207).
Does the project meet the Regional criteria for readiness for [X]Yes [ ] No
implementation?
Project Development objective Ref

1. The development objectives of EDFC2 are to: (a) provide additional rail transport
capacity, improved service quality and higher freight throughput on the 393 km Kanpur-
Mughal Sarai section of the Eastern Dedicated Freight Corridor; and (b) develop institutional
capacity of DFCCIL to build, maintain and operate the entire DFC network.
Project description
(a) Design, construction and commissioning of the Kanpur-Mughal Sarai section of

Eastern DFC consisting of 393 km of double-track electrified railway designed for
freight train operations with 25 ton axle-load (upgradable to 32.5 ton axle loads) at 100
km/h.
(b) Continuing the provision of institutional support to assist DFCCIL develop its
capability to best utilize heavy-haul freight rail systems.
Hi
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment (OP/BP 4.01) [X] []
Natural Habitats (OP/BP 4.04) [] [X]
Pest Management (OP 4.09) [] [X]
Physical Cultural Resources (OP/BP 4.11) [X] I]
Involuntary Resettlement (OP/BP 4.12) [X] I]
Indigenous Peoples (OP/BP 4.10) [] [X]
Forests (OP/BP 4.36) [] [X]
Safety of Dams (OP/BP 4.37) [] [X]
Projects in Disputed Areas (OP/BP 7.60) [] [X]
Projects on International Waterways (OP/BP 7.50) [] [X]
111
Covenants applicable to Project Implementation
Legal Covenants
Name: Recurrent Due Date Frequency
Social and Environmental Management Yes N/A N/A
Unit
Description of Covenant
DFCCIL to maintain the Social & Environmental Management Unit with adequate staff in
headquarters and field offices for ensuring compliance with, and the implementation of, social
and environmental safeguards measures/documents
Quality and Safety Audit Consultant Yes Six (6) months after the N/A
(QSAC) & Social and Environmental Effective Date
safeguards Monitoring and Review
Consultant (SESMRC)
DFCCIL to select and engage the services of a QSAC and SESMRC in order to prepare quarterly
monitoring reports on the implementation of the civil works and compliance with the Safeguard
Documents
Project Management Consultant (PMC) Yes Three (3) months after N/A
the award for the first
civil works contract for
the project
DFCCIL to select and engage the services of a PMC in order to assist with contract management
functions for the design-build contracts, and the general implementation of the project.
Project Documents Yes N/A N/A
DFCCIL to implement the project in accordance with the Project Implementation Manual, the
Concession Agreement, the Track Access Agreement, the Safeguard Documents and the GAAP.

Annual GAAP Progress Report Yes June 30 Each Year
DFCCIL to prepare annual progress reports on the implementation of the GAAP.
iv
Partial/Phased Plan for Signaling and Yes Prior to award of any N/A
Telecommunications Systems systems contract.
DFCCIL to agree: (i) with the respective contractor carrying out the railway track construction,
on a partial/phased plan for the installation of signaling, telecommunications and electrical
system; and (ii) with the respective authorities and/or relevant utilities, on an interconnection
and/or utilities relocation plan.

Track Access Regime No Prior to N/A
commencement of
commercial operations
DFCCIL to ensure that the track access charge regime is in place and operational prior to
commencement of commercial operations of the EDFC.
Safeguard Documents Yes N/A N/A
DFCCIL to implement the Project in accordance with the Safeguard Documents (i.e. EMF, RPF,
EAs, EMPs, SIAs, and RAPs), and to refrain from unilaterally amending, suspending, voicing or
waiving any provision of said documents.

Governmental Permits & Resettlement Yes Prior to commencing N/A
Measures/Compensation any civil works
DFCCIL to ensure that all associated to certain civil works: (i) governmental permits and
clearances have been obtained, and any conditions for such permits met/fulfilled; and (ii) all
resettlement measures (including compensation to Project Affected Persons ) have been carried
out, prior to displacement and/or the provision of relocation assistance to all displaced persons.
Contractors compliance with Safeguard Yes N/A N/A
Documents
DFCCIL to ensure that the contracts for civil works include the obligation of the relevant
contractor to comply with the relevant Safeguard documents applicable to such civil works.

Implementation Reviews of Safeguard Yes December 31 Each Year
Documents
v
DFCCIL to undertake annual reviews and prepare reports on the results obtained and experiences
gained in the implementation of the RAPs; and implement adjustments to the RAPs and RPF as
per the recommendations made by the Bank.
Ineligible Expenditures (negative list) Yes N/A N/A
DFCCIL shall insure that the proceeds of the Loan are not utilized to finance land acquisition or
to pay any compensation for resettlement and rehabilitation of displaced persons under the
Project.

Grievance Redressal Mechanism Yes N/A N/A
DFCCIL to maintain a two stage grievance redressal committee at district level and headquarters,
and an ombudsman to handle/process any complaints arising out of the implementation of the
RPF and the RAP.
Final Impact Study No One year after N/A
commissioning of
facilities financed
under the project
DFCCIL to provide to the Bank a final impact study of the Project, conducted under terms of
reference satisfactory to the Bank.
vi
INDIA -Eastern Dedicated Freight Corridor Project 2 (EDFC2)
Investment Project Financing - Series of Projects
I. STRATEGIC CONTEXT AND RATIONALE
A. Country Context
1. India's economy experienced a high rate of growth between 2000 and 2010. However
since 2011, the annual growth rate has slowed from over 8 percent to below 6 percent. The
slowdown may be partly attributed to the global economic downturn and heightened risk
aversion of financial markets. Nonetheless, some of the economic challenges are rooted in the
domestic economy and a significant slow-down in India's fixed investment rate'. The
Government of India (GOI) is seeking creative ways to respond to global economic problems,
and also recognizes the need to address structural constraints to growth. A key GOI policy
response is through expanding and improving India's infrastructure. In the Twelfth Five Year
Plan (2013-2018), the Government has set a high infrastructure investment target of US$1
trillion; an important part of the Plan is to modernize critical parts of the ageing and congested
transport infrastructure, including the railway network. Improving critical transport infrastructure
will lay the foundation for sustained future economic growth.
B. Sector and Institutional Context
2. India's railways are governed by the Railways Act (1989). The railway sector is
supervised by the Ministry of Railways (MOR). The Indian Railway Board (IRB) assists MOR
in the discharge of ministerial responsibilities, and exercises the policy powers of the central
government in relation to Indian Railways and executes the administration, supervision and
direction of the entities that provide the great majority of rail services in India. The term Indian
Railways (IR) is typically used to refer collectively to the IRB and the railway infrastructure and
services that are delivered by the 17 geographically-based Zonal Railways (ZRs) 2 . IRB is
responsible for the establishment (or merger/abolition) of these ZRs, appoints ZR General
Managers, oversees their compliance with MOR policies, determines staffing and remuneration
policies, allocates rolling stock, fixes tariffs, approves ZR operating and capital budgets,
approves specific capital expenditures over certain limits, and reallocates cash deficits or
surpluses of individual ZRs to maintain adequate financial balance in each. There are a few
separate railways which are special purpose joint ventures between MOR and other entities (such
as the Kutch Railway Company Ltd and the Konkan Railway Corporation Ltd), but in practice
IR carries over 99 percent of railway traffic in India.
3. IR operates a national rail network of about 64,600 route-kilometers, which is one of the
most densely-used rail networks in the world. In 2012-2013, it carried over 8.7 billion
passengers and about 1 billion tons of freight. Its total traffic task (measured by total traffic units
carried 3) has increased by nearly 110 percent in the last ten years. Despite strong growth in its
freight business, IR has been losing market share to road haulage. This situation is the result of
insufficient physical capacity and service quality, exacerbated by the need to fit freight trains
into a busy passenger service schedule. Yet, if an annual economic growth rate of 7 percent were
again to be attained, the underlying freight traffic demand would grow at around 8.75 percente
1Gross fixed capital formation as a ratio of GDP at current prices.

2 In this document Indian Railways is also used in the same sense.
Traffic-km are passenger-km plus freight ton-km.
4 Assuming a typical elasticity of 1.25 for this stage of development.
1
Without additional rail network capacity, much of the traffic for which rail should have
competitive advantage, would be forced to use road haulage or be suppressed. In both cases this
would be at a cost to the economy, and in the former case, at a cost to the environment as well.
Over the last decade, IR has successfully adopted many management measures to: (i) squeeze
more capacity from existing assets; (ii) increase average trainload; (iii) utilize equipment more
efficiently; and (iv) improve railway labor productivity. Today, physical capacity on key
corridors is the most pressing constraint.
4. The main corridors in India are part of a Golden Quadrilateral connecting New Delhi,
Mumbai, Chennai and Kolkata. They account for 16 percent of the railway network's route
length but carry more than 60 percent of its freight task. The rail sector urgently needs to add
capacity to these routes. The Gol has, therefore, approved a long-term plan to build dedicated
freight-only lines, paralleling the existing Golden Quadrilateral mixed traffic routes. The new
freight network will allow trains to carry more freight, faster, more reliably and at lower cost.
The relief on the existing lines will allow improvements in passenger services. At completion,
total corridor railway capacity will double, thereby unleashing a new platform for supporting
economic growth.
5. The first dedicated freight corridors (DFC) to be built are the Western and Eastern
Corridors. The Western Corridor (Delhi-Mumbai), which is 1,499 km long and is funded by the
JapaneseInternationalCooperationAgency (JICA) is in the early stages of implementation. The
Eastern Corridor is 1,839 km and extends from Ludhiana to Kolkata . World Bank support for
the Eastern Dedicated Freight Corridor (EDFC) was conceived as a series of projects in which
the three sections (total length 1,133 km) would be delivered sequentially, but with considerable
overlap in their construction schedules. The first loan in the EDFC Program was approved by the
Bank in May 20116 and EDFC1 is already under implementation. This Project relates to the
EDFC2 section (Kanpur-Mughal Sarai). Table 1 presents the three sections included in the
World Bank support. The remaining 663 km of the EDFC is proposed to be funded by GOI/PPP.
Table 1- World Bank Funded Eastern Dedicated Freight Corridor (EDFC)
Projects Section Length (km) Number of Tracks Cost (US$ m)
EDFC1 Khurja- Kanpur 343 Double 1,453
EDFC2 Kanpur- Mughal Sarai 393 Double 1,650
EDFC3 Ludhiana- Khurja-Dadri 397+43DL Single 1,399
Program 1,176 4,502
6. The GOI has adopted a new institutional framework to deliver and operate the DFC
network. The Dedicated Freight Corridor Corporation of India Ltd. (DFCCIL) has been set up as
a special purpose company under the Companies Act (1956) to deliver and manage the freight
corridor. Its shares are owned by MOR, which has subscribed to its capital. DFCCIL is
essentially an infrastructure provider. It will not operate freight train services but will offer non-
discriminatory access to IR trains and other qualified train operators. An arm's length
relationship between DFCCIL and MOR is governed by a concession agreement. MOR will pay
DFCCIL track access charges for use of the entire DFC network. The concession agreement is
s Main cities are cited to aid geographic understanding; the precise route sections are provided in the text.
6 EDFC 1 was funded under the Adaptable ProgramLoan (APL) instrument. In accordance with new World Bank policy (OP/BP
10.00 introduced April 2013), EDFC2 and EDFC3 will be financed as a Series ofProjects under the Investment Project
Financinginstrument
7 In this document, the section funded under APL 1 will be referred to as EDFC 1.
2
based on commercial principles and includes utilization incentives which will apply to the entire
DFC network (including both Western and Eastern Corridors). More details are provided in
Annex 3.
C. Higher Level Objectives to which the Program and the Project contribute
7. The World Bank's support for the Eastern DFC Program will contribute to attainment of
economic growth, poverty reduction and shared prosperity. The program is aligned with the three
important areas of engagement set out in the World Bank's Country Program Strategy for India
(CPS 2013-2017, Report No. 76176): integration; transformation; and inclusion. First, the
projects will improve transport connectivity and domestic market integration for freight-
consigning industries in India and will contribute significantly to the integration objectives of the
CPS. Second, the project will have a transformational value in reducing greenhouse gas
emissions and other environmental costs of transport by promoting transfer of freight from road
haulage to rail transport. Moreover, the project will be a catalyst for accelerated economic
development in the relatively poorer states in the country such as Uttar Pradesh and Bihar. These
poorer states will benefit more from the new rail infrastructure. Third, the project's contribution
to inclusion will follow from the release of passenger transport capacity on existing rail lines.
This will lead to communities along the corridor having better access to employment
opportunities, health, education and other social services.
II. PROJECT DEVELOPMENT OBJECTIVES
A. Program and Project Development Objectives
8. The development objectives of the Eastern DFC Program are to meet growing freight and
passenger demand on the Eastern Corridor with an improved level of service, and develop
institutional capacities of DFCCIL and IR to build, maintain and operate the entire DFC network.
9. The development objectives of EDFC2 are to: (a) provide additional rail transport
capacity, improved service quality and higher freight throughput on the 393 km Kanpur-
Mughal Sarai section of the Eastern dedicated freight corridor; and (b) develop institutional
capacity of DFCCIL to build, maintain and operate the entire DFC network. World Bank
funding for the Eastern DFC Program is meant to achieve high level objectives through
sustained engagement. Progression is also subject to World Bank Board approval for each of the
three loans. Table 2 outlines readiness milestones for EDFC2 and EDFC3; the milestones for
EDFC2 have been achieved.
Table 2- Readiness Milestones for EDFC2 and EDFC3
* Readiness milestones for EDFC2 * Readiness milestones for EDFC3

* Civil works contracts awarded for EDFC1 9 Civil works contracts awarded for EDFC 2
* SIA, RAP, EA and EMP completed for EDFC2 * SIA, RAP, LA and EMP completed for EDFC3
* 50 percent land acquisition complete for EDFC2 9 50 percent of land acquisition complete for EDFC3
* Staffing as per DFCCIL Human Resources Plan 9 Staffing per DFCCIL Human Resources Plan
* Appointment of DFCCIL independent directors 9 Appointment of DFCCIL independent directors
* MIS system integration contract awarded * MIS substantially implemented for construction phase
* Online complaint handling system in place 9 Heavy-haul locomotives and wagons specifications
PPP Options Study for future DFC lines complete * finalized and procurement strategy in place
* Assessment of approaches to non-discriminatory
access by qualified operators completed by MOR
* Method for establishing track access charges
* Traffic Marketing Plan for DFC capacity by MOR
3
* Development of long term heavy haul strategy and
implementation plan
* DFCCIL MoU (with MOR) rating is 'Good' or higher
B. Program and Project Beneficiaries

10. The direct project beneficiaries will be the power and heavy manufacturing industries of
Northern and Eastern India and their customers. These industries rely on railway transport for
their material inputs and in part for the distribution of bulk processed and semi-processed
commodities and consumer goods to markets and ports. Other beneficiaries will include:
community groups, residents, farmers and vulnerable groups along the corridor. Rail passengers
will also benefit from construction of a dedicated freight railway since congestion will be
relieved on existing passenger lines by the transfer of freight to dedicated freight lines.
11. As part of a related initiative, the World Bank is working with GOI and state
governments to identify economic and physical development opportunities along the freight
corridor. GOI and state governments are planning to set up 7 integrated manufacturing clusters
using EDFC as the backbone. These clusters will be set up with an investment of about $1 billion
on either side of EDFC. This initiative is expected to generate substantial employment and
development opportunities in the poorer parts of the poorer states.
C. PDO Level Results Indicators
12. Outcome indicators of the project are: (a) number of additional train paths produced on
the Eastern DFC; (b) volume of freight carried; and (c) improved institutional capacity of
DFCCIL. The Results Framework for the project is described in Annex 1. The indicators are
similar to those for EDFC1, except that the number of new passenger services on existing lines
has been omitted, as it has been decided that such impact cannot realistically be attained within
the relatively brief period of the project.
III. PROJECT DESCRIPTION
A. Project Components
13. The Project has two components:
(a) Design, construction and commissioning of the Kanpur-Mughal Sarai section of the
freight only train operations with 25-ton axle-load (upgradable to 32.5 ton axle
loads) at 100 km/h.
(b) Continuing the provision of institutional support to assist DFCCIL to develop its
14. The institutional support component will focus on the following tasks:
* A study to analyze and understand different safety related aspects of the DFC
program and their implementation.
* Energy optimization options for the dedicated freight corridor.
* Study on specifications of heavy haul wagons and their procurement.
* Assessment of alternative approaches to non-discriminatory access and
development of a methodology for establishing track access charges.
4
* Study for skill enhancement and training of Stakeholders
B. Project Financing
15. Lending Instrument. The lending instrument for the Project is investment project
financing.
16. Table 3 summarizes the Project cost and financing plan for EDFC2 by component.
Table 3- Summary of Project Components, Costs and Financing for EDFC2 (US$ Million)
Project Component IBRD GOI Total
(a) Design, Construction and Commissioning of the 393kms Kanpur- Mughal 1,093.75 550.00 1,643.75
Sarai Section
(b) Institutional Development Component 6.00 0.00 6.00
Front End Fee 0.25 - 0.25
Total Financing Required 1,100.00 550.00 1,650.00
17. PartialFront End Fee Waiver. India has requested a partial waiver of the front end fee
payable on a $1 billion portion of the proposed $1.1 billion EDFC2 loan, in consideration of the
fee already paid on a similar amount cancelled from the loan 8financing of the IIFCL operation.
The front end fee for India Infrastructure Finance Company Ltd (IIFCL) was $2,987,500 which
was capitalized into the loan amount of $1,195,000,000. As part of the IIFCL restructuring and
cancellation approved by the Board on December 12, 2013, IIFCL was downsized in the
amount of $1.0 billion. Given the Single Borrower Limit constraints faced by the Bank vis-d-vis
India, the requested partial waiver of the front end fee will make it possible to unleash this
sizable unutilized amount under the IIFCL loan for redeployment in this EDFC2 investment
operation, thus providing financial support to the much required resources for the railway
infrastructure sector. The amount of the proposed waiver is $2,500,000. The Bank would
however require the payment of the standard front-end fee of 0.25%, (i.e., $250,000) on the
remaining $100 million of the EDFC2 loan in excess of the amount deployed as per the IIFCL
cancellation.
C. Lessons Learned and Reflected in Program and Project Design
18. The overall program design for the series of projects responds to the challenges faced by
previous IR projects in meeting project cost and time expectations. Project design for EDFC2
also reflects lessons learned from EDFC1 on implementation requirements.
19. The new institutional framework for the dedicated freight program as a whole represents
a more commercially focused way of delivering freight railway infrastructure in India through a
Special Purpose Company (DFCCIL) established under Company Law. DFCCIL's contract
strategy is to award Lump Sum Design & Build contracts instead of traditional 'time and
materials' contracts. This new contracting strategy will lead to higher certainty of completion
cost and time. Moreover, the availability of worksites and the planned release of mobilization
and equipment advances by DFCCIL will allow contractors to commence work in a timely
manner.
20. Implementation capacity and processes reflect lessons from EDFC 1. For example,
DFCCIL is using a Human Resources Plan to match capacity to implementation needs. An
8India:Financing Public Private Partnerships (PPP) in Infrastructure through Support to the India Infrastructure
Finance Company Limited Project, Proposal to Restructure, December 12, 2014, R2013-0207.
5
internationally qualified Consultant has been engaged to advise DFCCIL on technical
specifications, and provide support on project management and quality control. Compliance
mechanisms for Bank safeguard policies established under EDFC1 will be repeated for EDFC2
by the Social and Environment Management Unit (SEMU).
D. Alternatives Considered and Reasons for Rejection
21. Alternative approaches to capacity enhancement. MOR found that improving the
existing line could not provide sufficient capacity beyond 2017. The alternative of a new
passenger dedicated line would certainly free up existing lines for freight, but this would mean
either pushing new passenger rail services outside city centers (with additional freight passing
through the centers) or involve difficult and expensive urban land acquisition. It would also
provide no technological improvement to freight train operations.
22. Alternative alignments of the track. The proposed alignment of EDFC runs parallel to
the existing line for most of its length. The aim is to maximize use of the existing right of way. It
detours onto new alignments to avoid city centers and other built-up areas. The detour
alignments were selected based on multiple criteria, including technical engineering
requirements, cost implications, ease of land acquisition/resettlement and limiting environmental
impacts.
23. Phased Expansion and Single/Double track. For EDFC2, the option of constructing a
single track initially and a second track later was rejected since demand forecasts indicate a large
number of trains that require double-track operation within 5-10 years9
24. Diesel/Electric Traction. Electric traction was preferred because it results in lower unit
costs of operations and maintenance at the projected high volumes of traffic, and because it is
used on most connecting lines, thus allowing seamless through-movement of trains between
DFCCIL and IR networks.
25. Public Private Partnership. A private concession was not favored for the first lines of
the DFC program because the complex operational, safety and economic interfaces between IR
and DFCCIL are still evolving and are commercially untested. Nonetheless, MOR and DFCCIL
have investigated PPP options for future extensions of the network.
IV. IMPLEMENTATION
A. Institutional & Implementation Arrangements
26. DFCCIL is responsible for Project implementation. Its Managing Director reports to the
DFCCIL Board. The Board comprises of the Chairman, five full time Directors (including the
Managing Director), four independent directors, and two government nominees. DFCCIL has its
headquarters in New Delhi, with field-based offices for the Eastern and Western Corridors. Each
section of the Eastern Corridor is the responsibility of a Chief Project Manager (CPM); for the
Kanpur-Mughal Sarai section the CPM and associated staff will work from offices already
established at Allahabad. The Quality and Safety Audit Consultant (QSAC) will provide
oversight and monitor compliance. DFCCIL's Social and Environment Management Unit
(SEMU) headed by a General Manager will oversee the environmental management plan (EMP)
and the resettlement action plan (RAP). These activities will be undertaken by operational staff
9 The demand forecasts, analysis and assumptions for EDFC are detailed in the Project Appraisal document for EDFC1 (Board
Report no. 59888-IN, May 4 2011). Up dated analysis shows that demand for freight rail has broadly remained the same.
6
at headquarters and by field staff, supported as necessary by consultants. A two-stage public
grievance redress mechanism will be established with two grievance committees operating at the
field and DFCCIL levels, and with an Ombudsman. Safeguard quality monitoring will be carried
out by third party consultants (Social and Environmental Safeguards Monitoring Review
Consultants - SESMRC).
B. Results Monitoring and Evaluation
27. The Results Framework is in Annex 1. In addition to the immediate transport outcomes,
a 'before and after' impact study will be initiated subsequent to opening of the first stage of the
Eastern DFC. This study will establish the pre-commissioning benchmarks and an appraisal
methodology to capture wider and longer-term range outcomes of the project (including new
passenger train services on existing lines). The logic framework and terms of reference for the
Impact Study are described in the PAD for EDFC 1.
C. Sustainability
28. There has been strong and sustained institutional commitment to the DFC Program by all
stakeholders. Gol views it as one of the country's highest public infrastructure priorities because
of the concern that insufficient railway capacity will impede growth in both energy and industrial
sectors. IR considers this project an essential step to increasing the volume and profitability of
its freight business. Moreover, the commitment of all parties is undiminished by the economic
slowdown, as IR's rail freight task has increased by 30 percent since 2007.
29. The operational sustainability of the DFC Program is very high as it will be built and
maintained using established technologies that are in wide use internationally and will be subject
to rigorous commissioning tests. DFCCIL will set up a robust and effective maintenance system
for the infrastructure being developed, thus ensuring high levels of availability and reliability.
DFCCIL is financially sustainable because under the agreed track access principles, both
DFCCIL and IR will earn a positive financial contribution from using the new lines, with mutual
financial incentives to increase that use.
30. In a wider sense, the DFC Program will contribute to greater environmental sustainability
of India's transportation systems as a whole, because greater use of railways for freight will be
more energy efficient and generate lower greenhouse gas emissions than road haulage.
V. KEY RISKS
31. The detailed operational risk assessment is presented in Annex 4. The implementation
risk of the project is Substantial. See summary below.
7
Risk Category Rating Risk Category Rating
Stakeholder High Project Risk
Implementing Agency Design Moderate
Capacity Substantial Social and Environmental High
Governance Substantial Program and Donor Low
Delivery Monitoring and Sustainability Moderate
Overall Risk Rating: Substantial
32. Some of the key risks identified during project preparation include:
* Insufficient funds for the DFC program's overall financing plan.
* Inadequate corporate governance mechanisms
* Time and cost overruns and quality of work.
* Capacity constraints in DFCCIL for project management, review of designs and
surveys, financial management, procurement, and implementation of Environmental
Management Plans (EMP).
* The new Right to Fair Compensation and Transparency in Land Acquisition Bill
(2013) may have implications for the project's land acquisition and potential
additional claims for compensation.
33. Factors mitigating the above risks are:

i) GOI's strong commitment to this project, due to its high economic priority,
visibility, scale and profile. EDFC1, which is financing the adjacent route section,
has not encountered any public opposition and there is little expectation that
EDFC2 will provoke substantial political or public opposition.
ii) Government systems to check and deter leakage of resources are responsivelo given
the current high public scrutiny. Systems to enable citizen input have been set up
for responding to Right to Information Act requests and to public grievances.
iii) The earlier shortfalls in corporate governance identified under EDFC1 are being
addressed. Consultants have been hired to help define the risk management (RM)
framework; the RM team is expected to be in place before implementation of
EDFC2. GOI has also streamlined some of the corporate guidelines, especially on
the role of independent directors"
iv) The GAAP being used for EDFC1 will also apply to EDFC2. Most of the actions
suggested under EDFC 1 have been complied with.
10As demonstrated by the prompt investigation of the CVC/MOR into allegations of fraud and corruption in 2010-11.
1 The new DPE norms and responsibilities of the independent directors state that "they should satisfy themselves on the integrity
offinancial information andfinancial controls, besides ensuring that the risk management systems of the company are robust
and defensible."
8
v) A new Human Resource Development Plan is being implemented to manage
staffing, resources and related training on technical aspects, project management,
procurement and financial management.
vi) The EDFC2 Resettlement Action Plan (RAP) has been streamlined to incorporate
the recommendations of the resettlement audit of EDFC 1.
vii) SEMU, which has gained experience in assessing and addressing social and
environmental risks, will have its capacity enhanced to handle the challenges of
EDFC2.
viii) The Entitlement Matrix for the project provides for paying compensation as per the
Railway Amendment Act (RAA, 2008) or any other policy/legislation applicable in
the state in which land is acquired.
VI. APPRAISAL SUMMARY
A. Economic and Financial Analysis of EDFC2

34. The base freight traffic growth projections underlying this appraisal are industry-based
projections for individual commodities, but in aggregate represent the following average annual
growth in tons consigned: to 2016/7 at 7.2 percent; from 2016/7 - 2021/2 at 5.5 percent; and
from 2021/2 - 2041/2 at 4 percent. Freight is dominated by coal, iron and steel and food grains,
with numerous other bulk and semi-bulk commodities in smaller quantities. Container traffic is
growing on routes from the east coast ports and West Bengal to the industrial north. Base
passenger trips on existing lines are anticipated to be constant during 2013-14 but to then recover
to 4 percent per year by 2015-16, and to maintain this average growth throughout the evaluation
period.
35. The project has an estimated EIRR of 21 percent and an ENPV at a discount rate of 10
percent per year of INR107 billion (USD2.14 billion estimated in 2009 constant prices). The
relatively high EIRR reflects the fact that the existing route which EDFC will augment is one of
the busiest rail corridors in India. Without the project, track capacity would be amplified on
existing tracks, but only slowly and partially, and at greater expense and with much disruption.
The EIRR when the other two sections are considered, together with the sensitivity of the EIRR
to changes in key variables, are shown in Table 4. In all, cases the EIRR remains at least 15
percent and the NPVs therefore remain positive.
Table 4 - Estimated Economic Internal rate of Return (2009 constant prices)
EIRR (%) in billion INR @ 10%
Base appraisal result (EDFC2) 21 107
EDFC1 + EDFC2 23 212
EDFCl + EDFC2 +EDFC3 23 305
Sensitivity tests:
Construction costs increased 30 % 15 91
Transfer rate to DFC reduced to 75 % 19 83
DFC above-rail cost savings reduced from 25% to 15% 19 80
IR construction avoided 19 90
Reduced to 50 %
No generated traffic 18 63
36. The Project financial appraisal was carried out from three perspectives:
9
(i) a stand-alone financial assessment of both the Project and the remaining Program
(relative to the completion of Phase 1, financed by EDFC 1).
(ii) an assessment of the overall finances of DFCCIL, the entity which will construct
and operate both Western and Eastern DFCs, and be responsible for servicing and
repayment of debt.
(iii) an assessment of the ability of MOR to make the required equity contributions to
DFCCIL.
37. The FIRR of the EDFC2 Project (and remaining part of the Program) has been estimated
from the total Project cash flows, irrespective of funding source (including financial flows of
DFCCIL, IR and IBRD). The FIRR is shown in Table 5, together with sensitivity to various
risks. The FIRR was calculated in nominal terms (i.e., using projections that include inflation)
over 30 years from 2015. A 'real' FIRR has been estimated approximately1 2 by netting-off the
assumed inflation rate of 7 percent 13
38. The project financial returns are robust to variations in capital costs, assumptions about
traffic transfer rates, and avoided investment. However, the ability to attract generated traffic (i.e.
high-value container traffic that would otherwise travel by road) also has a significant impact on
the FIRR and emphasises the need for IR and DFC to maximize the new traffic opportunities
provided by the project. EDFC2 and EDFC3 combined have an FNPV of 17 percent nominal
(approximately 10 percent in 2009 constant prices) of INRI 18 billion (USD2.6 billion).
39. Financial projections for DFCCIL as a stand-alone company show that it will at least
break even over the period, reflecting the Concession Agreement principle that track access
charges will, while providing commercial incentives, meet a test of overall revenue adequacy.
Table 5 - Estimated FIRR of project (constant prices)
All Sources Combined
Base
EDFC2: Kanpur-Mughal Sarai 13
EDFC1 + EDFC 2 15
EDFC2+ EDFC3 (EDFC2 plus Ludhiana- Khurja) 15
EDFC1 + EDFC2 + EDFC3 16
Sensitivity tests (for EDFC2)
Construction costs increased 30% 9
Transfer rate to DFC reduced to 75% 12
DFC above-rail cost savings reduced from 25% to 15% 10
IR construction avoided reduced 50% 10
No diverted traffic 11
40. Analysis of the impact of the project on IR finances show (based on the rail service
pricing and other assumptions adopted), that IR could achieve a working ratio1 4 of 86 percent
by 2015, thereafter continuing to improve and stabilise at around 77 percent. The results depend
on increases in tariffs, which for passengers are assumed as 60 percent of inflation (a real
reduction of 2 percent/year) and for freight as 85 percent of inflation (a real reduction of about 1
percent/year). If the projected working ratio is not met, the DFC program funding could
alternatively be sustained by reallocation of capital funding. IR's projected investment program
12 Ascertain of the financial costs, most notably the dividend payment to GOI, do not increase with inflation.
13This allows for the much higher inflation of the past two years, as all costs and benefits have been calculated at 2009 prices.
14The ratio of expenditure (excluding depreciation) to revenue.
10
during the next few years (including rolling stock funded through IRFC) is anticipated to be
around INR6-700 billion/year (2012 prices). The DFC program requires around INR65
billion/year from IR, i.e., about 10 percent of the total planned IR capital expenditure.
B. Technical
41. Four main technical principles underpin the approach to and design of the Project and
these principles are equally applicable to the other sections of the Eastern DFC Program.
42. First,the principle that the heavy-haul approach that India is adopting accords fully with
international experience that high-tonnage trains of high net/tare weight, operated with well-
utilized rolling-stock, drive freight train operating costs lower and offer greater competitiveness.
A heavy-haul railway is typically one operating trains of at least 5,000 tons with locomotives and
wagons of average axle loadings of 25 tons or more. All major rail freight companies
internationally, including in Australia, Brazil, Canada, China, Russia, South Africa, USA and
elsewhere, have successfully adopted the heavy-haul rail freight system where infrastructure and
operating conditions allow it.
43. Second, the new freight-only lines are intended to overcome infrastructure and operating
constraints on existing Indian lines by improving speed, reliability and the utilization of freight
locomotives, wagons and crews. Most heavy-haul trains in the world also travel on either
exclusively or heavily predominant freight lines. Indian Railways' existing lines are joint-use
lines with lower axle-load capability, and are predominantly occupied by an extremely busy
passenger timetable. Freight trains do not run on a timetable but must be fitted in where they can
and are regularly staged in sidings en route to allow faster passenger trains to pass. This creates
unreliable transits and slow average speeds, while making it difficult to run longer trains because
of the limited number of places where they can be staged. In the longer-term, improvements to
connecting lines may allow even higher axle weights on freight only lines.
44. The third principle of design has been to align Eastern DFC tracks to be adjacent to the
existing tracks where possible. The Kanpur-Mughal Sarai alignment runs parallel to existing
tracks for about 263 km, thereby minimizing land-take and disruption. It detours about 100 km
around cities and built-up areas (with the biggest diversion on this section being the Allahabad
by-pass). The detours avoid the major disruption and resettlement problems of driving new rail
tracks through the urban fabric. The detours also reduce the environmental impacts of running
heavy trains through city centers. Detour alignments have been selected on multiple
environmental, social and engineering criteria.
45. Finally, grade-separated junctions have been adopted on grounds of safety, avoidance of
local traffic disruption and better train performance. Grade-separation avoids the need for level
crossings where pedestrians and all local vehicles must cross tracks. It minimizes disruption to
local mobility and improves safety since conflict points are reduced. It also improves the
performance (and energy efficiency) of trains because it means less acceleration and deceleration
of freight trains at busy road crossings. No level crossings will be built on detour sections. A
large number of underpasses will be built for providing local connectivity across the railway
tracks.
C. Financial Management
46. DFCCIL will provide the fiduciary assurance over proper and effective use of project
funds, including loan proceeds. EDFC2 will adopt the FM arrangements instituted under EDFC 1
11
utilizing DFCCIL's mainstream FM systems. Agreed Project FM arrangements are documented
in the updated ProjectImplementation Manual (PIM). The organization is still developing and
the systems once implemented would need to be fully tested and improved as part of the project.
47. A CorporateGovernance and FinancialAccountability (CGFA) assessment of DFCCIL,
conducted during preparation of EDFC1, has been updated for EDFC2. Several activities in the
agreed action plan have been completed and others are in various stages of implementation.
DFCCIL has strengthened its Board of Directors, and there is a functional Audit Committee
under terms of reference approved by the Board. A full-time General Manager (Risk
Management) has been appointed and selection of consultants for establishing a risk
management framework is on-going.
48. Development of Enterprise Resource Planning (ERP) including FM systems is
underway. Finance Manuals have been updated (updating of the Budget Manual is in progress).
Accounting is presently carried out on an off-the shelf accounting application and is outsourced
to a firm of Chartered Accountants; it will be migrated to ERP once it is completed. Financial
reporting will be through Interim UnauditedFinancialReports (IFR). Internal audit is conducted
by a firm of Chartered Accountants and the project transactions will be covered under internal
audit. External audit of project financial statements will be conducted by independent auditors
under agreed terms of reference. These steps are expected to strengthen the control environment
and the accounting function to provide the fiduciary assurance over project funds.
49. FM and risk management staffing has been enhanced. DFCCIL plans to strengthen FM
staffing through a mix of regular appointments and deputation. The regular staff activities in
DFCCIL will be supported by a General Consultant appointed to provide input in various areas
such as procurement, Legal Advice for review of documents, Project Management to support
contract management and Quality/Safety Audit.
50. With the implementation of the agreed action plan, the FM arrangements of DFCCIL are
considered adequate to accurately account for and report on usage of project resources and
provide the required fiduciary assurance. The project FM arrangements are detailed in Annex 3.
D. Procurement
51. Procurement guidelines and packaging of contracts. Procurement for the project will be
in accordance with the World Bank's guidelines15 and the provisions stipulated in the Loan
Agreement. Physical works will be procured in four packages, comprising two civil & track
work contracts for individual line sub-sections and two separate system contracts for signaling
and for electrification. For the two civil & track work contract packages, bids will be invited
from prequalified contractors for Design & Build Lump Sum contracts after a single
prequalification process. Applications for prequalification were received from 24 applicants in
July 2013 following an Invitationfor Prequalification. The prequalified contractors may bid for
one or both packages, depending on their capacity. The two systems contracts will follow a
similar prequalification process.
52. Procurement Plan and functional arrangement. The Procurement function will be
carried out by DFCCIL's Procurement Cell. The General Consultant hired by DFCCIL will
continue providing services throughout the bidding process until the bid evaluation report and
15Guidelinesfor Procurement under IBRD Loans and IDA Credits dated January 2011(Procurement Guidelines) and Guidelines
for Selection and Employment of Consultants by World Bank Borrowers dated January 2011 (Consultant Guidelines).
12
the contract award recommendations have been completed and the Bank's 'no objection' is
given. DFCCIL will make appropriate additional arrangements for quality assurance and risk
mitigation during the bidding and implementation process. DFCCIL has developed a
ProcurementPlan for the first 18 months. This plan is available in DFCCIL's project database
and on the World Bank's external website. The Procurement Plan will be updated semi-
annually.
E. Social (including Safeguards)
53. Safeguard Policies. The social safeguard policy arrangements for EDFC2 are a
continuation of those agreed for EDFC1. The World Bank Operational Policy 4.12 (Involuntary
Resettlement) is triggered and appropriate safeguard measures have been proposed. OP 4.10 has
not been triggered as no tribal people are affected. Land acquisition (LA) for EDFC2 will be
carried out in accordance with the Railway Amendment Act (2008), and adopting the National
Rehabilitation and Resettlement Policy (NRRP) 2007 for resettlement and rehabilitation (R&R)
assistance. A Social Impact Assessment has been carried out and a Resettlement Action Plan has
been prepared for EDFC2.
54. Safeguard Policy Linkages. Resettlement policies of the World Bank will apply to all
components of the Project, regardless of the source of financing. Bank safeguard policies will
also apply to concurrent linked activities, including ROBs/RUBs, which will be undertaken
without Bank financing. The RAP will be prepared and implemented for such linked activities as
approved for EDFC 1 (details in Annex 3).
55. Land Acquisition and resettlement. The Project requires acquisition of 1,400 hectares of
land, including 1,250 hectares (89 percent) private land and 150 hectares of government land. Of
the 13,034 families affected (comprising 64,000 people), 12,466 families will lose their land in
part or in full. About 90 percent of project-affected farmers will lose less than 0.15 hectares of
land, whereas 14.6 percent will become landless, marginal or small farmers. Of the 623
structures affected, 55 are community structures and 568 are residential or commercial
properties. Around 90 percent of structure owners, who will lose over 25 percent of their built-up
area, will be treated as displaced and will receive applicable R&R benefits. Traditional occupiers
of village lands since 1961 have been declared title holders and will receive compensation for
lands they occupy. As of August 2013, compensation has been awarded for 1,373 ha (or 98% of
land required) and 73 percent of the award has been disbursed. Table 6 summarizes the
resettlement impacts.
Table 6 - Land Acquisition and Resettlement Impacts
Sub- Length Parallel/ No. of LA No. of % land No. of No. of LA Award
Section in km Detour Villages required Affected owners losing Displaced affected Declared
Sections affected (in ha) land a linear strip families community (in ha) as on
(in km) owners (< 0.15 ha) prosperities Sept 2013
I 8 8+0 10 9 287 226(79%) 13 1 9
II 134 108+26 173 634 5708 5208 (91%) 236 23 607
III 193 134+59 154 508 5428 4854 (93%) 247 27 508
IV 58 0+58 35 249 1043 897 (86%) 11 4 249
Total 393 250+143 372 1400 12,466 11,185 507 55
56. DFCCIL is taking several steps to minimize risks associated with land acquisition. These
include: providing livelihood assistance to displaced shop-keepers and those rendered landless
13
and marginal, and addressing compensation issues through the arbitration and grievance redress
mechanism. An independent R&R monitoring and review process will enable any emerging risks
to be identified and addressed. Gender and social inclusion issues are addressed by extending
special R&R entitlements to families headed by women, single women, persons with disability,
and poor widows under the category of vulnerable project-affected persons. The RAP offers
special benefits to small/marginal/landless farmers, artisans, vulnerable persons and families
living below the poverty line (Details are given in Annex 3).
57. A Resettlement Quality Audit was carriedout in January 2013. The audit noted progress
in land acquisition and confirmed that all those displaced have received compensation and R&R
benefits. It recognized that the entitlement framework was adequate and recommended measures
to improve implementation quality. Based on these recommendations, DFCCIL has agreed to: (i)
strengthen district grievance mechanisms; (ii) ensure compensation at replacement value, using
independent evaluators as considered necessary by the Competent Authority; (iii) pay livelihood
assistance to those losing livelihoods and are left with marginal, or no land plots; (iv) clarify the
position regarding jobs for land losers; (v) impart job skill training to the poor, eligible, and
affected youth; and (vi) improve implementation capacity (Details are in Annex 3).
58. Institutional arrangements to support social and environment activities. EDFC2 will
build on the arrangements under EDFC1: the Social and Environment Management Unit
(SEMU), field management teams, NGOs, independent Monitoring and Review, multi-stage
Grievance Redress Mechanism, Arbitrators, and an Ombudsman in place (Details are provided in
Annex 3).
59. Consultations and Disclosure. Community consultations were held in 326 villages and
41 consultations were held at the tehsil level. The consultations were held during July- December
2011 and follow up consultations were carried out at key locations during July- September 2012.
DFCCIL continues to hold community consultations as a part of the land acquisition process
with the help of NGOs hired to provide implementation support at the field level. The RAP for
EDFC2 was disclosed on the DFCCIL website and at the World Bank Info-shop on January 3,
2013. The RAP summary has been translated to Hindi and disclosed locally.
60. New Land Acquisition Bill. The Government of India has enacted a new Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Actin
September 2013. While the Act states that Railway Act (2008) is exempt from the purview of
this new legislation, the applicability of this Act to linear projects will only be established once
the rules are notified. Nonetheless, the Entitlement Matrix adopted for the DFC project provides
for paying compensation as per the Railway Amendment Act (RAA, 2008) or any other policy or
legislation applicable in the State in which the land is acquired, whichever is higher at the stage
of announcing the award. The land acquisition for EDFC2 is at an advanced stage of
implementation, with award declared for 98% of the 1,400 ha required.
F. Environment (including Safeguards)
61. Environmental Safeguards Policies. The Project is Environmental 'Category A' and
triggers two Bank environmental safeguard policies: environmental assessment (OP/BP 4.01)
and physical cultural resources (OP/BP 4.11). In compliance with these policies, DFCCIL
conducted a detailed Environmental Assessment (EA), in accordance with the Environmental
Management Framework (EMF) developed for EDFC 1. The EA identified the following major
impacts: (i) acquisition of a total of 0.998 hectares of forest land including 0.098 ha at one
14
location along the alignment in Mirzapur district and the rest, protected forest land where DFC
alignment crosses highways; (ii) cutting about 18,148 trees along the entire 393 km of the
alignment; (iii) about 28 million m 3 of earthworks for the embankment and 2 million m 3 Of
quarry material; (iv) increased noise and vibration levels at 15 sensitive receptors; (v) impacts on
70 physical and cultural properties; and (vi) health and safety issues during construction.
62. Environment Management Plan and disclosure. The EA includes a comprehensive
environmental management plan, comprising: (i) compensatory afforestation for the loss of
forest land and trees in compliance with the Forest Conservation Act; (ii) avenue plantation at
10 trees/km along the corridor alignment; (iii) rehabilitation of the borrow areas utilized for
project earthworks; (iv) noise barriers in the 15 locations affected by high noise levels; (v)
rehabilitation of affected cultural properties in close consultation with the local communities; and
(vi) specific construction safety and environmental management measures. The EA was
disclosed by DFCCIL on its web site (http://dfccil.org/DFCC/Public%/20Notices/PublicNotices)
on December 17, 2012 and at the World Bank Info-shop on January 7, 2013. The executive
summary of the EA, along with the EMP, in the local language (Hindi) has also been disclosed at
the local villages and districts for the benefit of local communities.
63. Health and Safety of Workers. Silicosis reduction strategies developed in EDFC1 to
address the health impacts on construction workers (due to handling large quantities of quarry
and construction material) will be implemented and incorporated in the EDFC2 construction
contract documents.
64. Climate Screening and Green House Gas Emissions. During implementation of
EDFC1, DFCCIL carried out a detailed analysis of greenhouse gas emissions (GHGs) from its
activities. It estimates that by 2041-42, the Eastern DFC would generate about 10.48 million tons
of GHGs compared with 23.29 million tons of GHGs without it - a reduction of 55 percent. The
reduction is due to the expected diversion of freight transport from road haulage to rail transport.
The project will pilot the Climate Screening Tool developed by the World Bank.
15
Annex 1: Results Framework and Monitoring
INDIA: Second Eastern Dedicated Freight Corridor Project (EDFC2)

Results Framework
Project Development Objective (PDO) : (a) provide additional rail transport capacity, improved service quality and higher freight throughput on the 393 km Kanpur- Mughal Sarai section of the
Eastern dedicated freight corridor; and (b) develop institutional capacities of DFCCIL to build and operate the entire DFC network.
Data Source/ Responsibilit Description (indicator

PDO Level Results E Unit of Baseline
FY
Cumulative Target Values**
Frequency y for Data definition etc.)
Indicators* Measure 2013-14 2015-16 2016-17 2017-18 2018-19 2019-20 Methodology Collection
Indicator One: pairs/day N/A 100 Annual DFC section DFCCIL Available DFC train paths
Additional freight traffic stats end-to-end Kanpur- Mughal
train paths on EDFC Sarai: train plan or
EH calculation for normal
week (excludes
maintenance time)
Indicator Two: net ton- N/A 22 Annual DFC section DFCCIL On all DFC trains between
Freight traffic carried km traffic stats Kanpur- Mughal Sarai
on the EDFC E] bills/year (annual total as per
standard operating
statistics)
Indicator Three: km/h 25 60 Annual DFC section DFCCIL Based on normal week
Average speed of (existing ops .stats sample of trains (train
freight trains line) km/train hours 2 ways)
Kanpur- Mughal Sarai
Indicator Four: Independe Good or Good or Good or Good or Good or Annual DFCCIL DFCCIL Gol standard procedures for
DFCCIL MoU (with nt annual higher higher higher higher higher PSU ratings evaluation of PSU entities
MOR) rating review
INTERMEDIATE RESULTS
Intermediate Result (Component One): Design, construction and commissioning of the Khurja-Kanpur section
IntermediateResult Cum. N/A
indicatorOne: completion 15 45 75 100 first full End year DFCCIL DFCCIL
Physical O of works year of construction
construction: civil by value operation monitoring

works
Intermediate Result Cum. N/A
indicator Two: completion 15 65 100 first full End year DFCCIL DFCCIL
Physical O of works year of construction
construction: by value operation monitoring

systems works
16
Intermediate Result (Component Two): Continuing institutional support to help DFCCIL to build and operate the DFC network
IntermediateResult Completed
indicatorOne: study DFCCIL DFCCIL
to analyze and
understand
different safety E]
related aspects of
the DFC program
and their
implementation
DFCCIL DFCCIL
indicatorTwo: Study
on energy
optimization options
for the dedicated
freight corridor
indicatorThree:
Study on heavy haul
wagons
specifications and
procurement
DFCCIL DFCCIL
indicatorFour:
Assessment of
alternative
approaches to non-
discriminatory
access and
development of a
methodology for
establishing track
access charges
17
Annex 2: Detailed Project Description
A. Overview
1. The proposed EDFC2 Project consists of the following components:
(c) Design, construction and commissioning of the Kanpur-Mughal Sarai section of the
freight only train operations with 25-ton axle-load (upgradable to 32.5 ton axle
loads) at 100 km/h.
(d) Continuing the provision of institutional support to assist DFCCIL to develop its
B. Infrastructure Component
2. The physical infrastructure proposed is the construction of 393 km Kanpur-Mughal Sarai
section of the Ludhiana-Kolkata Eastern Dedicated Freight Corridor (1,839 km). The Kanpur-
Mughal Sarai section will be constructed as a double line ballasted track laid on concrete
sleepers. It will be electrified with 2 x 25 kV AC, 50 Hz power delivered by an overhead
catenary system, and capable of operating at a maximum train speed of 100 km/h. It will be
designed for an initial maximum axle-load of 25 metric tons on the track infrastructure and 32.5
tons for supporting structures (so that later increases in axle-loads may be adopted). It will have
automatic block signaling, new telecommunications, and train radio and a SCADA control
systems.
3. The route alignment of the Kanpur-Mughal Sarai section will run mostly parallel to the
existing IR track; however, the alignment will detour near big cities and towns. It has been
divided into two slices for Construction of Civil and Track works contracts as shown in Table 7.
Table 7: Characteristics of the EDFC2 sections
Slice Total length Characteristics

(kn)
163 Parallel length: km 126
1
Detour length: km 37
230 Parallel length: km 137
2
Detour length km 93
Total 393
4. On the parallel track section, existing level crossings that have relatively high traffic will
be replaced by Road Over Bridges or Under Bridges (ROBs/RUBs) spanning new and existing
tracks. The remaining level crossings will be improved by interlocking them with the train
signaling system and by providing electrically operated booms. Audio-visual warning systems
will ensure safety of pedestrians and vehicles. Some of these level crossings would be replaced
over time by ROBs/RUBs. The alignment will be fenced at critical locations. On the detour
sections there will be no level crossings. The terrain in the subject stretch is generally flat, and
there is a major crossing of the Yamuna River in the vicinity of Allahabad.
5. Signaling. A four-aspect automatic block system will utilize trackside signals. Automatic
Train Protection(A TP) will be provided as part of the signaling system . A new communication
system will be installed for this project with optical fiber cables laid on either side of the track. A
Global System for Mobile Communications - Railways (GSM-R) digital mobile communication
system will also be adopted. Infrared hot box detectors (which sense overheating of axle
At present, this is not a part of the estimated project cost.

18
bearings) will be installed to minimize rolling stock failures on track and to improve safety.
Automatic train identification equipment will be installed at selected stations. Measures will be
adopted for energy conservation as part of the design of the signaling system.
6. Packaging of Contracts. Construction will be under Design & Build contracts, with two
civil works contracts (each consisting of sub-grade, bridges and track), and two system contracts
(one for electrification and the other for signaling and telecommunications) for the entire 393 km
section.
7. Performance and Design Specification. The Design & Build contracts will be awarded
on the basis of Performance Specifications (PS), which will permit bidders reasonable freedom
to carry out detailed design. The PS specify broad physical and technical parameters, so that the
bids received are for a comparable product, but allow bidders freedom to propose proven and
cost effective technologies and innovative designs, and to use what they consider the most
efficient and cost-effective construction methods. The PS will comply with existing operational
standards of IR and meet the requirements of interoperability over connecting lines, as well as
other segments of DFC to be built in the future.
8. General Consultant/Owner's Engineer. DFCCIL has engaged a General
Consultant/Owner's Engineer (GC/OE) for preliminary design and procurement. The General
Consultant will draft the PS for DFCCIL to review and include in the draft bid documents.
9. The PS is based on preliminary designs and investigations carried out by DFCCIL
through a Consultant, and take into consideration the following:
* Alignment design (including centerline, longitudinal section and quantity of earth work in
cutting and filling)/staked alignment.)
* Land plans
* Preliminary geotechnical investigation of bridges.
* Preliminary General Arrangement Drawing (GAD) for bridges.
* Preliminary GAD and Schematic Plan for junction arrangements.
* Schematic plan for rail flyovers.
* Preliminary sample GAD for modification of existing ROBs/RUBs.
* Details of utilities to be relocated or modified.
* Abstract Cost for the stretch.
10. Other Investments. IR has approved projects for upgrading general-purpose lines that
intersect with the Eastern freight corridor. These line upgrading investments will be completed
before the dedicated freight corridor projects. IR plans to also procure about 10,000 freight
wagons and 178 high-powered electric locomotives and associated maintenance facilities. The
upgrading of connecting lines and procurement of freight wagons and electric locomotives are
being funded by IR outside the project.
C. Institutional Support Component
11. The Institutional Support component will finance the institutional strengthening of
DFCCIL and assist DFCCIL to develop technical and operational capabilities needed to best
utilize heavy-haul freight capability. This component involves:
1725t axle-load
19
* A study to analyze and understand different safety related aspects of the DFC program
and their implementation.
* Energy optimization options for the dedicated freight corridor.
* Study on heavy haul wagons specifications and procurement.
* Assessment of alternative approaches to non-discriminatory access and development of a
methodology for establishing track access charges
* Study for skill enhancement and training of Stakeholders
20
Annex 3: Implementation Arrangements
A. Project Administration Mechanism
1. Construction of the Eastern DFC Program will be administered by DFCCIL's

Construction Unit which is headed by the Director Project Planning (DPP). DFCCIL's Managing
Director reports to the DFCCIL Board comprising the Chairman, five full time functional
Directors (including the MD), four independent directors, and two government nominees. At the
operating level, each field unit is headed by a Chief Project Manager (CPM) reporting to DPP.
There are seven field units for the Eastern Corridor (of which five units will implement the
construction of the IBRD funded project in three phases). Each section of the Eastern Corridor is
the responsibility of a Chief Project Manager (CPM); for the Kanpur-Mughal Sarai section the
two CPMs and their staff will work from their offices already established in Allahabad. During
the construction phase, DFCCIL will ensure overall staff strength of around 930, with 30 staff in
each field office. Key personnel will all be trained in the World Bank's Procurement, Financial
Management, Social and Environmental guidelines.
2. For contract management of design-build contracts, the General Consultant (GC) will
assist DFCCIL initially during contract design and evaluation, and will either continue as or be
replaced by Project Management Consultants (PMC) during contract execution. Each field unit
under the project will be supported by a Team Leader and two Resident Engineers provided by
the PMC. The engineering head of the PMC will be based at the Project office in Allahabad,
where a design cell will also be set up for checking of designs submitted by the contractors.
3. A Social and Environmental Management Unit (SEMU) established within DFCCIL will
be responsible for the implementation of all social and environmental safeguards. A Procurement
Cell, adequately staffed and trained in Bank procurement, has been established. In addition,
support will be given by the General Consultant (GC) and a Legal Advisor during the bid
process. The GC will also coordinate contract management activities once the main contracts
have been awarded. Quality and Safety Audit Consultants (QSAC) will carry out quarterly
reviews and submit reports to DFCCIL management.
4. DFCCIL will provide quarterly progress reports to the World Bank. The reports will
provide the following information:
* Physical and financial progress of civil works.
* Implementation of GAAP and status of various procurements and audits, land
acquisition and utility shifting, RAP and EMP implementation.
* Status of various statutory clearances.
* Key issues faced during implementation and status of compliance with agreed actions
during implementation support missions and any other reviews.
Legal Agreements
5. In addition to agreements for the loan and project, the project requires two agreements:
a) Concession Agreement between MoR/IR and DFCCIL.
b) Track Access Agreement (TAA) between DFCCIL and IR.
6. The GOI stipulates that the relationship between MOR and DFCCIL is set out in a
Concession Agreement, based on three principles:
21
* DFCCIL should be commercially independent and at 'arm's length' from IR.
* DFCCIL should be market-focused.
* While not operating commercial freight train services, offer non-discriminatory
access to 'qualified operators' (the responsibility for qualification remaining with
MOR).
7. Outline of the Concession Agreement. The Concession Agreement sets out, inter alia,
the agreed project and concession objectives, the rights and obligations of the parties in
achieving those objectives, and an enabling framework to incentivize the parties to provide and
use the corridors efficiently and effectively. In addition to clauses that provide the usual legal
safeguards for various parties, the Concession Agreement also reflects the government's specific
objectives for this project by:
* Creating management autonomy and independence of DFCCIL and giving market focus
to DFCCIL activities with regard to construction and maintenance.
* Seeking to promote non-discriminatory access to the corridors.
Access to all qualified operators is envisaged on a non-discriminatory basis. The only rail freight
train operators authorized to use the corridors at opening will be the existing Zonal Railways.
MOR undertakes that as soon as practicable after completion, if DFCCIL is performing its
maintenance and operational obligations under the Concession Agreement, and if it is consistent
with the policies of the Gol, MOR will publish qualifications and criteria which must be met by
any train operator to qualify to as an authorized rail user.
8. Track Access Agreement. The track access agreement will govern the track access
18
charges paid by IR for use of the Corridor . The Agreement also sets out performance targets
and conditions of use. Track Access Charges (TAC) payable by the Ministry of Railways (MoR)
to the Dedicated Freight Corridor Corporation Limited (DFCCIL) will be negotiated between the
parties so as to: (a) provide revenue adequate for DFCCIL to be a commercially sustainable
company earning a reasonable return (revenue adequacy principle); and (b) incentivize the
company to handle increments to traffic, maintain agreed performance standards and seek
efficiency improvements (incentive principle).
Financial Management, Disbursement and Procurement
9. Corporate Governance. A Corporate Governance Financial Assessment (CGFA) of

DFCCIL, the project implementing entity, was carried out at the time of the preparation of
EDFC1. DFCCIL agreed on an action plan to meet the Corporate Governance Guidelines of the
Department of Public Enterprises (DPE). Since then DFCCIL has made progress in meeting the
DPE norms and has taken several steps to meet the requirements of the model code. The status of
implementation of DPE's Model Code of Corporate Governance is summarized in Table 8.
Table 8: Status of Implementation of DPE Code of Corporate Governance in DFCCIL
Model Code Current Status in DFCCIL
18
The Track Access Agreement is an Annex of the Concession Agreement
22
a) Board of Directors shall have an optimum
combination of functional, nominee and
independent directors.
* The number of functional directors (including The sanctioned strength of the Board is 12.
CMD/MD) should not exceed 50 percent of the The current 11 member Board comprises: a Chairman, 5
actual strength of the board. functional directors including a Managing Director, 2
* The number of nominee directors shall be restricted part-time official directors and 3 part-time non-official
to a maximum of two. directors.
* In case of CPSEs not listed in the stock exchanges, One position of part-time non-official director has been
at least one third of the board members shall be kept vacant for financial institutions to appoint a
independent directorsdir nominee ci
b) Qualified and independent Audit Committee

shall be set up giving the terms of reference.
* The audit committee shall have minimum 3
directors as members. 2/3 of the members of
audit committee shall be independent directors. An Audit Committee of the Board (ACB) comprising
The chairman of the audit committee shall be three part-time non-official directors (independent
an independent director. directors)and one part-time official director has been
* All members of the audit committee shall have constituted with the chairperson being an independent
knowledge of financial matters of the company director.
and at least one member shall have good The scope and coverage of the audit committee
knowledge of accounting and related financial approved by the Board has been finalized in line with
management expertise. DPE guidelines (last revision in August 2012). During
* Detailed and elaborate role has been prescribed FY 2012-13, the ACB met 4 times.
for audit committees, including review of
financial performance, reporting and
disclosures; internal control mechanisms
(including internal audit); compliance with
audit observations (internal as well as
statutory); whistle blower mechanism etc.
* Audit committees shall meet at least 4 times in
a year and not more than 4 months shall elapse
between two meetings.
c) Risk management strategies and their oversight The risk management function in DFCCIL is under a
shall be one of the main responsibilities of the board full-time General Manager (Risk Management) who is
and management. The board shall ensure the supported by an individual consultant and there are plans
integration and alignment of the risk management to hire another consultant. Once the regular positions are
system with corporate and operational objectives filled and the risk management framework is in place,
and also that risk management is undertaken as a the consultants will be replaced by regular full-time
part of normal business practice and not as a staff.
separate task at set times.
The company shall lay down procedures to inform DFCCIL is in the process of engaging a Risk
board members about the risk assessment and Management Consultant to establish an integrated risk
minimization procedures. management system in line with the DPE guidelines.
The Annual Report of DFCCIL contains a Corporate
Governance Report and a certificate of compliance with
DPE guidelines, Nominee directors appointed by an institution which has invested in or lent to the company are
sAccording
t
deemed to be independent directors
At the lime of appraisal, one more position of par-time non-official director (independent director) is vacant due to completion
of tenure of the incumbent director. The process for selection and appointment of a new director is in an advanced stage.
2 Them1present ACB has eree members - two non-official and one official - that meets the DPE guidelines
23
These procedures shall be periodically reviewed to DPE Guidelines from a Company Secretary and a
ensure that executive management control risks Management Discussion and Analysis Report22
through a properly defined framework. Procedures
will be laid down for internal risk management as
well.
Disclosure on risks and concerns shall from part of

the Director's report.
10. Financial Management and Disbursement. At the time of preparation of EDFC1,

DFCCIL was in the process of putting in place the entity's FM systems and controls. An action
plan was agreed with DFCCIL to further strengthen FM arrangements. DFCCIL has completed
many of the agreed activities and others are in various stages of implementation (status is
provided in Table 11). EDFC1 and EDFC2 will run concurrently and DFCCIL will expeditiously
complete implementation of its FM systems to cope with the increased volume of business.FM
and risk management staffing has been enhanced and DFCCIL has prepared plans to strengthen
these functions through a mix of regular appointments and deputation.
11. Development of the Enterprise Resource Planning (ERP) including FM systems is
underway. Accounting, Financial Reporting, Works and Internal Controls and Internal Audit
Manuals have been updated and integration with ERP is in progress. Updating the Budget
Manual is on-going. Accounting is presently carried out on an off-the-shelf accounting
application outsourced to a firm of Chartered Accountants and will be migrated to the ERP once
it is rolled out. Reporting through Interim Unaudited Financial Reports (IFR) in prescribed
format adopted in EDFC1 has stabilized and will continue in EDFC2. Internal audit is conducted
by a firm of Chartered Accountants and the project transactions will be covered under internal
audit. External audit of project financial statements will be conducted by independent auditors
acceptable to the Bank under agreed terms of reference. For EDFC 1, there is no backlog of audit.
The project FM arrangements have been updated in the PIM. These steps are expected to
strengthen the control environment and the accounting function to provide fiduciary assurance
over project funds.
12. The residual risk rating is substantial since the systems and process enhancements
completed are yet to be fully tested as DFCCIL's current operations are limited while other
systems are developing.
Project Financial Management arrangements
13. The major elements of the FM accountability framework agreed with DFCCIL are
discussed below:
14. FM Capacity. DFCCIL's Finance Department will assume overall responsibility for the
FM arrangements of the project. The Finance and Accounts function is under a full-time Director
(Finance) supported by a Group General Manager (Finance), General Manager (IT and Finance)
looking after ERP implementation; and General Manager (Risk Management) looking after
entity-wide risk management and audit. According to DFCCIL's staffing program 49 positions
out of the targeted 72 positions in FM are currently filled. Staffing is being continuously
strengthened through a mix of regular appointments and deputation. The FM function at the field
units is headed by a Deputy Chief Project Manager (Finance) supported by a Project Manager
22
The Report for 2011-12 identifies land acquisition including payment of compensation, and short-tenure of staff on
deputation as the two most important risks and concerns.
24
(Finance) and Assistant Manager (Finance) and this will also be strengthened once the
recruitment under way is completed.
15. As and when staff is recruited, they are sent for training in financial management at the
railway institutes. Some FM staff had earlier undergone familiarization in Bank procedures, but
further training will be needed for the newly recruited staff, to cover project FM, procurement
and contract management requirements, and to handle the large scale Design-Build contracts.
16. Funds Flow, Budgeting and Counterpart Funding. The IBRD loan will flow directly to
DFCCIL, while counterpart funds will be drawn from the budget of MoR and provided to
DFCCIL. Annual MOU between MoR and DFCCIL will include the commitment from MoR for
adequate and timely release of adequate counterpart funds to DFCCIL to be provided as General
Budgetary Support in the budget of MoR. The funds (IBRD loan) will be maintained in a
separate project bank account (Funds for EDFC 1 and EDCF2 will be tracked, accounted for and
their utilization will be reported separately).
17. Accounting. This is presently carried out at DFCCIL's head office in accordance with the
provisions of the Companies Act and prescribed accounting standards, using an off-the-shelf
accounting package (TALLY). Accounting has been outsourced to a firm of accountants and
will be migrated to ERP once it is rolled out. DFCCIL will capture project expenditure in a
manner to facilitate: (i) segregation of IBRD project expenditures from other DFCCIL
expenditures; (ii) separation of expenditures under EDFC1 and EDFC2.
18. Internal Controls including Internal Audit. Accounting, Financial Reporting, Internal
Controls and Internal Audit and Works Manuals have been updated and finalized. Updating the
Budget Manual is in progress. The manuals approved so far have been shared with the ERP
Integrator. According to the system for verification and payment of contract obligations, all bills
under the EDFC contracts will be reviewed and certified by the PMC or Independent Engineer
(to be appointed). The bills will then be reviewed and passed for payment by an authorized
finance officer such as Deputy Project Manager (Finance) and Chief Project Manager of the
designated PIU and the certified bills will then be presented to central office for payment
19. DFCCIL has outsourced its internal audit function to a firm of Chartered Accountants
under ToR approved by the Audit Committee of the Board and reporting to the General Manager
(Risk Management). Internal audit has been strengthened by engaging a new audit firm and
updating the internal audit manual. The Bank financed project will be subject to internal audit
and the internal audit reports will be available to the World Bank for review. DFCCIL would
need to orient its internal audit towards assessing the effectiveness of management's risk
mitigation measures (i.e., Risk based Internal Audit) once the risk management framework is put
in place. The scope of internal audit should be expanded to cover aspects of contract
management and project implementation (especially design build and other specialized types of
contracts).
20. Financial Reporting. DFCCIL will report details of project expenditure incurred and
planned through quarterly Interim Un-audited Financial Reports (IFR) based on the format
agreed for EDFC1. DFCCIL will also prepare annual project financial statements (similar to the
format of the IFR), which will be audited and submitted to the Bank and disclosed on the website
of DFCCIL.
21. External Audit. The statutory auditor of DFCCIL is appointed by the Comptroller and
Auditor General of India (C&AG). Following completion of the statutory audit, the C&AG
conducts a supplementary audit and additionally may also conduct a proprietary audit. Statutory
audits of DFCCIL are on schedule and have been completed up to financial year 2012-13.
25
22. In addition to the annual entity audit report and financial statements, DFCCIL will submit
to the Bank a separate project audit report, along with the audited Project Financial Statements
(PFS) by September 30 each year during the currency of the project. The project audit will be
conducted by an independent firm of Chartered Accountants (which may include the statutory
auditors appointed on the advice of C&AG), acceptable to the Bank, under ToR agreed with the
Bank for EDFC1. The annual audited PFS would separately identify each component under the
project, its progress and the funding sources for each of the components. The following audit
reports will be monitored through the World Bank's Audit Reports Compliance System (ARCS).
Table 9-Audit Reports Compliance Systems
Agency Audit Report Audited by Due Date

DFCCIL Annual Entity audit report Statutory Auditors recommended by the C&AG. September 30
as required under the
Companies Act, 1956.
DFCCIL Annual audit report on the An independent firm of Chartered Accountants September 30
Project financial acceptable to the Bank under agreed ToR.
statements.
23. Disbursement. IBRD loan disbursement methods under EDFC2 would include Advance,
Reimbursement, Direct Payment and Special Commitment. Advance would be variable, based on
a three-months rolling forecast. Supporting documents for disbursement applications would be
IFRs submitted quarterly. Supporting documentation for Direct Payment would be the records
evidencing eligible expenditure, including receipts, invoices, completion reports etc. The original
documentation will be retained by DFCCIL and made available to the Bank during project
implementation support missions. Expenditure on land acquisition and resettlement and
rehabilitation is ineligible for reimbursement under the project. Retroactive financing would be
available to DFFCIL in accordance with Bank procedures as provided in the Loan Agreement.
The categories of expenditure, related amounts and percentages to be financed under EDFC2 are
summarized in table 10.
Table 10- Disbursement Category, Amount Allotted and Disbursement Percentage
Category Amount Allotted Percentage of

($USD million) Expenditures to be
financed
(inclusive of Taxes)
Goods, works, consultant's services and 1093.75 80% for World Bank financed
training under component 1. contracts.
Goods, consultants' services and training 6.0 100%
under component 2.
24. Disbursement Policy. In compliance with the project's disclosure policy, DFCCIL will
disclose the annual audited project financial statements, along with the auditor's report, as well
as the quarterly IUFRs, on its website along with other relevant project documents. Under the
Access to Information Policy of the World Bank, the annual project audit report and the audited
financial statements will be disclosed in the Bank's website.
25. Action Plan. Table 11 provides a status of the action plan agreed by DFCCIL during
EDFC 1 and updated during EDFC2 preparation.
Table 11: Updated Action Plan (continuing from EDFC1)
Area of Action Actions required for Action/s completed Action/s to be completed

implementation
Internal Audit
26
implementation
Internal audit Define internal audit The Internal Audit function is now Appoint another consultant.
arrangements to be organization and under a General Manager (Risk Consultants to be replaced
in line with reporting structure Management) supported by a DGM, after recruitment and
expanding after comparing with an Assistant Manager and a training of regular staff
requirements and peers and identify Consultant. Internal Audit is
good industry dedicated resource outsourced to a firm of Chartered
practices. for internal audit Accountants. Till appointment of
function, regular officers, DFCCIL has
inducted an individual consultant.
Appropriate internal Expand internal audit A revised TOR was approved by the Going forward, DFCCIL
audit TOR to cover entire Audit Committee in July 2012 and will consider introducing
structure and organization, risk by the Board and internal audit is Risk Based Internal Audit.
independence, management. being conducted in accordance with
this TOR. Audit is completed up to
June 2013.
Appropriate internal Update internal audit Internal audit manual has been TOR of QSAC to be
audit manual through updated. incorporated in the Project
Manual. carrying out audit by Implementation Manual.
major audit firm
______________under broad TOR. _______________
Strengthen Human Resource Management

Put in place proper Develop structure, A General Manager (HR) has been According to DFCCIL's
HRM structure and policies and appointed. HR Manual has been staffing program, against
plan for recruiting procedures taking updated and finalized. A duty list target FM staff strength of
and retaining staff, into account has been prepared for each staff An t72, 49 positions have been
expected growth in Annual Training Plan was finalized filled and another 17 have
activities of DFCCIL. in August 2012. Recruitment of the been selected.
______________ ________________remaining FM is ongoing. _____________
Customized business solutions ERP ,

Implement ERP for Appoint Prime ERP is being implemented under A new date has been set to
integrated solutions Consultant; prepare supervision of GM (IT). Systems make this operational by the
to meet implementation plan Integrator and Project Management last quarter of 2013.
requirements of for implementation of Consultant are in place. Heads of
management and enterprise IT departments have been nominated as
stakeholders in a solution, the process owners, business
timely and efficient blueprints have been prepared and
manner. many have been accepted, hardware
has been installed and is being
Other reporting configured, LAN/WAN installation
for MIS. is in progress and collection of
Review organization master data in functions such as HR
wide reporting and Finance has commenced and
requirements and change management seminars have
develop suitable been organized. However, the
forms and planned date for operationalizing
instructions for their this by June 2013 has slipped.
preparation and
distribution.
Financial Management Manuals
Update manuals for Initiate action for Accounting Manual, Financial Update the Budget Manual
a more formalized preparing! Reporting Manual, Works Manual by last quarter of 2013.
and systems updating manuals: and Internal Controls & Internal
oriented financial (a) Budgeting Audit Manual have been updated
accountability and (b) Accounting and finalized. Manuals that have
corporate (c) Internal Controls been updated/finalized, are being
governance (d) Financial shared with the ERP Integrator.
27
implementation
environment Reporting. Updating of Budget Manual is in
covering budgeting, progress.
accounting, internal
controls, financial
reporting in view of
the proposed
significant growth
in the activities.
Procurement
26. Procurement for the project will be carried out in accordance with the World Bank's
"Guidelines: Procurement under IBRD Loans and IDA Credits" dated January 2011
(Procurement Guidelines); and "Guidelines: Selection and Employment of Consultants by World
Bank Borrowers" dated January 2011 (Consultant Guidelines) and the provisions stipulated in
the Loan Agreement (LA).
27. Contracting Strategy and assessment of DFCCIL Procurement. Contracts for the works
component will be processed in four packages, comprising of two civil & track work contracts
and two separate System Contracts (Signaling and OHE).
28. The two civil works contract packages will cover the section from Mughal Sarai to
Kanpur (at Bhaupur) with a total length of 393 km. Bids have already been invited from pre-
qualified contractors for these two Design-Build Lump Sum contracts. Invitations for pre-
qualification were published on April 2013 and applications were received in July 2013 for the
two civil works and track contract packages. Pre-qualified contractors could bid for one or both
packages, depending on their capacity. The two systems contracts (signaling and electrification)
will be bid subsequently for the entire 393 km track under a Design-Build Lump Sum contract
following a similar procedure. The Pre-qualification process for the two systems contract has
also started. The bidding and contracting documents that were used for EDFC1 will be used as
model for EDFC2 and will be customized to suit its specific requirements. The bidding
documents will incorporate: (i) the instruction to Bidders from the Bank's Standard Biding
Document; (ii) relevant provisions from the SBD for Works (latest edition); and (iii) The
Conditions of Contractfor Plant and Design-Buildfor Electricaland MechanicalPlant, andfor
Building and Engineering Works Designed by Contractor (latest edition) published by the
FederationInternationalefe Ingenierus-Counseil(FIDIC Yellow Book). Consolidation of these
various standard documents into a set of customized Design-Build bidding and contracting
documents will be the responsibility of DFCCIL, with assistance from its General Consultant
(GC) and its Legal Advisor and guidance from the Bank. The contract packaging for the civil
and systems contracts is given in the procurement plan.
29. An assessment of DFCCIL's capacity to implement project procurement was conducted
at the time of preparation of EDFC1 by the Bank. An updated capacity assessment of the agency
was conducted for EDFC2. The main findings are:
* DFCCIL Procurement cell, created for the implementation of EDFC 1, has gained experience
in procurement under EDFC1 and this will significantly facilitate EDFC2 procurement.
However, limitation in dedicated procurement staff may create a bottleneck for multiple
contracts under the EDFC1/ EDFC2 and will necessitate having a strong procurement team.
* Bidding documents have been developed under EDFC1 that can be adopted for the
recommended contracting strategy.
28
30. Communication and working arrangements between DFCCIL and the consultants
supporting DFCCIL in the procurement process need to be improved so that requests for
clarification from applicants/consultant/bidders are addressed in a timely manner. DFCCIL
should strengthen its procurement and contract management capacity to manage multiple large
value contracts.
31. To strengthen procurement, the following measures have been agreed upon:
* Procurement staff. Two procurement experts will be available at all times to oversee on
going procurement activities, review output of GC, and address any contract implementation
issues. All procurement staff will get adequate training on procurement.
* Procurement Plan. DFCCIL has prepared a detailed estimate of the time it would take to
complete procurement of works and consultant services, taking into consideration the
reviews by the Bank. Procurement of works and consultant services from preparation of
bidding documents to award of contract is estimated to take 14 months and 10 months for
works and selection of consultants respectively as per the agreed model time schedule.
* General Consultant (GC). GC has been employed under EDFC 1 to provide support during
bidding, bid evaluation, and contract award phase. The TOR of the GC covers essential areas
where DFCCIL currently lacks adequate capacity, including preparation of contracting
strategy, bidding documents, and handling of technical issues throughout the bidding process.
* Project Management Consultant (PMC). DFCCIL will employ the PMC under terms of
reference agreed with the World Bank. The PMC will be responsible for detailed reviews of
design drawings prepared by the Contractor, and advising DFCCIL on all issues in the
management of the contract. Exceptions to DFCCIL's delegation of decision-making
authority to the PMC will be listed specifically in the contract upon completion or
provisional completion of the works by the Contractor. The PMC will have no authority to
amend or terminate the Design-Build contracts.
* Operating Procedures. DFCCIL's current operating procedures which have been utilized for
EDFC 1 will be used for EDFC2 and have been detailed in the PIM. Additional or modified
internal decision-making processes may be developed, as necessary, to complement current
procedures. The working arrangement between DFCCIL and its consultants will be
streamlined to ensure that preparation of procurement documents and evaluation reports are
completed in time in accordance with the procurement plan.
32. Procurement Risk Assessment. The overall procurement risk is rated High. The risks
associated with Procurement and the mitigation measures were identified in the assessment of
DFCCIL Procurement capacity update and are summarized in Table 12.
29
Table 12: Summary Risk Assessment
Description of risk Risk Mitigation measures Residual
Ratinga Risk Ratinga
H Strengthen the Procurement cell ensuring M
DFCCIL has limited experience in
handling large and complexthat there are two dedicated procurement
experience is limited to the work done staff so the
under EDFC1. DFCCIL has procurement procurem fo th two pe
staff with limited prior experience in Bank Thet so be pve trinigsi
projects. The implementation of both
EDFC 1 & 2 will create a heavy work load procurement.
on the office and could result in delays.
ttH civil works contracts have been

The M
LTed orksnmber ofsqe contractrs, divided into two lots to ensure that the
Thecworksind ssthvems cotrgvac areoum size of the contracts corresponds with the
speatraciaized int eymaretitn
v uean g capacity of contractors in the market. The
ont a r icen ometitsu qualification requirements will be
i idreviewed and optimized to the extent
possible to maximize competition.
SM DFCCIL is in the process of streamlining M
Soproeprti of onrates afndl its internal decision-making and
aproc e ntera ei es oftechnica
eo communications processes, in
imanprocurmelndecson thpica w anticipation of: (i) the expected heavy
ipcthes ti. flow of inquiries from bidders during the
nbidding process; and (ii) intensive
demands for the implementation of
EDFC and EDFC2.
ressnM The bidding documents prepared under M
there osndd din dontr EDFCI will be used as a model for the
t te menes icaI contracts. The PQ document used for
EDFC1 has already been adopted and
used to invite application for the Works

and Track contract.
Average H MI
HbHigh; MpModrraoe and LiLow
33. Procurement Implementation Arrangements. Procurement activities will be carried out

by DFCCIL Procurement Cell. DFCCIL's General Consultant (GC) would continue providing
services throughout the bidding process until the bid evaluation report and the contract award
recommendations have been completed and 'no objection' is given by the Bank. DFCCIL's
Legal Advisor would provide legal advice in counseling DFCCIL during the bid clarification
process, the contract award period and the implementation of the construction contracts.
DFCCIL would select and recruit the Project Management Consultant (PMC) within three
months of award of the first civil works contract.
34. A bidding process would be launched for civil works after pre-qualification, under the
structured two-stage process described in the Bank' s SBD for the Procurement of Plant
Design, Supply and Installation. DFCCIL would conduct individual clarification meetings with
the bidders concerning their technical proposal and bring to their attention any amendments
required. DFCCIL will issue any amendments to all bidders. DFCCIL would issue a
Memorandum of Understanding to each bidder, documenting decisions made regarding the
amendments and changes to be made to the first stage technical proposals. The Second Stage
bids would be invited from bidders, whose technical proposals in the First Stage have been found
to be substantially responsive, including, as applicable, the decisions documented in the
Memorandum of Understanding.
30
35. Other Relevant Procurement Arrangements. In addition to DFCCIL's General
Consultant and Legal Advisor, additional arrangements would be put in place by DFCCIL for
continuous and sustained quality assurance and risk mitigation during the bidding and
implementation process. Consultants will be employed using available funds under EDFC1 to
the extent possible.
36. Provisions for National Competitive Bidding (NCB). For procurement subject to NCB,
DFCCIL would prepare standard bidding documents that include the NCB provisions agreed
from time to time between the Bank and GOI.
37. Domestic Preference. In accordance with clause 2.55 and Appendix 2 of the guidelines,
domestic preference will not apply to the civil works contracts and the systems contract to be
awarded on a Design-Build Lump Sum basis.
38. Contracts for Consulting Services and Training. The consultant contracts to be financed
under this Project are listed in the Initial Procurement Plan.
39. Training needs for the DFCCIL staff, including procurement, contract administration and
IT, will be assessed and conducted periodically as required.
40. Procurement Plan. DFCCIL has developed an initial Procurement Plan (PP) for the first
18 months covering the entire project scope. It is consistent with the Project Implementation
Plan and provides information on procurement packages, methods and the applicable
requirements for Bank review. This will be available in DFCCIL's project database and on the
Bank's external website and the Bank's Procurement Plan Management System (SEPA). The PP
will be updated semi-annually in agreement with the Bank.
41. Post Reviews. In addition to the prior reviews of specific procurement transactions to be
carried out by the Bank in accordance with the Procurement Plan and Annex 1 of the
Procurement Guidelines, post reviews will be carried on at least 20 percent of the contracts
which are subject to post review in the Procurement Plan.
31
Procurement Plan for EDFC2 Project Dated [February 19, 2014]
a) Works and Goods
a ~ Expected Contract
Description/ Location e Bid- Start
Package No. Award
C Opening Date
Date0
Date
A B C D E F G H I K
1. WORKS
Civii Works and Track I - Mughalsarai - Karchana Lot 201 387 1 ICB Prior Feb 2014 Aug 2014 Oct 2014 Oct 2014 Mar 2018
Civil Works and Track II - Mughalsarai - Karchana Lot 202 387 1 ICB Prior Feb 2014 Aug 2014 Oct 2014 Oct 2014 Mar 2018
Signal and Telecom works - Mughalsarai - Bhaupur Lot 203 (393 9 1IB Prior Aug 2014 Mar 2015 May 2015 May 2015 Mar 2018
km)
Power, Overhead Electrification System Mughalsarai - Bhaupur Lot Mar 2018
204 (393 km)
204(33 kn)145 1 ICB Prior Aug 2014 Mar 2015 May 2015 May 2015
Total 1. for works 1016
2. GOODS
Total 2. for goods
Legend:
International Competitive Bidding (in accordance with section 2 of the Guidelines)
ICB = For works contracts valued at or more than US$40 Million
For goods contracts valued at or more than US$3,000,000
National Competitive Bidding (in accordance with section 3.3 of the Guidelines)
NCB = For works contracts valued less than US$100,000 - 40,000,000
For goods contracts valued less than US$100,000 -3,000,000
Poin For procurement subject to NCB, the bidding documents to be used for this purpose would include the NCB provisions agreed from time to time between the Bank the Gol. These
Ns currently applicable provisions are displayed on the website of the Bank's South Asia Region and the Project Implementation Manual. DFCC would prepare standard bidding
documents for NCB, subject to the Bank's review and clearance.
DC= Direct Contracting (in accordance with section 3.6 of the Guidelines)
Shopping (in accordance with section 3.5 of the Guidelines)
SH For works contracts valued at or less than US$100,000
For goods contracts valued at or less than US$100,000
For Works contracts: All ICB contracts. All NCB contracts of US$5.0 million equivalent or more including the first contract regardless of value of contract.
For Goods contracts: All ICB contracts. All NCB contracts of US$500,000 equivalent or more including the first contract regardless of value of contract.
Domestic~ Will not apply

Preference.
32
b) Consultants' Services
Review Adverti-
Es Contract
Estimated t by Bank sement Award Start Completion
Package No.
I Description of Assignment/ Location Cost .2 Prior
4) P / for EOI
Date
Date Date
(USs)/m Post Date
A B C D E F HI J
3. CONSULTANTS' SERVICES
1 Quality and safety monitoring consultant 3.64 QCBS Prior Oct2013 Oct 2014 Oct 2014 Jan 2018
Mughalsarai - Bhaupur (EDFC2) PMC for
2 construction supervision and contract 32.73 QCBS Prior Oct 2013 Oct 2014 Oct 2014 Jan 2020
management services
April Ma204 Jn01
3 SESMRC Consultant 0.22 QCBS Prior Oct 2013 May 2014 Jan 2018
4 Safety Study Assocaited with construction, 0.55 QCBS Prior Dec 2013 Sep 2014 Sep 2014 Sep 2015
Commissioning and Operational Phases of DFCC
5 Energy Optimization Option Study for DFCC 0.27 QCBS Prior Dec 2013 Sep 2014 Sep 2014 Sep 2016
6. jStudy for skill enhancement and training of PAPs 009 QCBS Post Dec 2013 Sep 2014 Sep 2014 Sep 2015
Total 37.49
Legend
QCBS Quality and Cost-based Selection (in accordance with sections 2.1 - 2.31 of the Consultant's Guidelines)
QBS Quality Based Selection (in accordance with section 3.2 of the Consultant's Guidelines)
CQ IConsultants Qualifications (in accordance with section 3.7 of the Consultant's Guidelines)
LCS Least-Cost Selection (in accordance with section 3.6 of the Consultant's Guidelines)
SSS Single source Selection (in accordance with section 3.8-3.11 of the Consultant's Guidelines)
IC Individual Consultant (in accordance with section V of the Consultant's Guidelines)
QCBS/QBS
(i) International short-list For all cases > US$800,000
(ii) Shortlist may include national consultants only For all cases < US$800,000
Other methods
CQS/LCS/FBS Up to 200,000
SSS As per 3.8 through 3.11 of the Guidelines
Individuals As per para Section V of Guidelines
All SSS contracts.

Prior Review For firms: All contracts equal to US$200,000 or more.
For individual consultants: All contracts equal to US$100,000 equivalent or more. All SSS contracts.
33
Environmental Management and Safeguards
42. Impact of the project and safeguards policies. The project involves major construction
activities such as earthen embankments for the rail track, a number of major and minor bridges,
rail flyovers and ancillary buildings. These activities are expected to cause environmental
impacts comprising diversion of forest land, cutting of trees, impact on community and cultural
resources, and land acquisition and involuntary resettlement. Considering the above, EDFC2 is
categorized as 'Category A' and triggers three safeguards policies- Environmental Assessment
(OP/BP 4.01), Physical Cultural Resources (OP/BP 4.11) and Involuntary Resettlement (OP/BP
4.12).
43. Environmental Management and compliance with Safeguards policies. In compliance
to these policies and also the Environmental Management Framework developed during the
preparation of EDFC1, the project has carried out an Environmental Assessment (EA) for the
Kanpur to Mughal Sarai section (EDFC2) and prepared an Environmental Management Plan
(EMP)to mitigate the anticipated impacts of the project. Based on detailed analysis carried out in
EDFC 1, the project has also integrated the Silicosis Reduction Strategies (SRS) and Green House
Gas Emission Reduction Strategies (GHG strategies).
44. The scope of EA is summarized below:
(i) The environmental profile of the project area was developed through field
investigations that led to detailed environmental strip maps of the proposed alignment
of the corridor.
(ii) Base line environmental features such air, water quality, flora / fauna, etc., in the
project area have been developed for two critical seasons (winter and summer).
(iii) Noise and vibration impacts at various sensitive receptors have been developed for
areas along the project alignment.
(iv) Potential environmental impacts for all the environmental parameters have been
assessed.
(v) 'Project' and 'No Project' scenarios and alternative alignment options have been
investigated.
(vi) Impacts on cultural properties have been assessed with the aid of a detailed inventory.
(vii) impacts of cutting 18,148 trees have been assessed and measures for mitigation
proposed
(viii) Impacts on cross drainage in the project area have been assessed.
45. The potential environmental impacts identified in the EA include: (i) acquisition of 0.998
hectares of forest land at one location including 0.098 ha along the alignment in Mirzapur
district; (ii) cutting of 18,148 trees in the entire 393 km of the alignment; (iii) involvement of
about 28 million m3 of earth work in the embankment and 2 million m 3 of quarry material; (iv)
increased noise and vibration levels at 15 sensitive receptors; (v) impacts on 55 physical and
cultural properties; and (vi) health and safety issues due to the construction activities of the
project.
46. As part of the EA process, Stakeholder Consultations and Disclosure were carried out in
75 villages along the project alignment during various stages of the EA process. The key inputs
from these consultations were focused on access to villages, noise / vibration and drainage
impacts. These aspects were considered in the design of mitigation measures and the detour
34
options. Draft outputs of the EA were also disclosed to the communities during the second round
of consultations and also through the DFCCIL web site.
47. The EMP prepared for the project includes the following specific mitigation measures:
(i) Compensatory afforestation to compensate with the loss of forest land and the loss of
trees in compliance with the Forest ConservationAct of Government of India.
(ii) Avenue plantation at 10 trees per km along the alignment, with a detailed plan for the
implementation of avenue plantation programs.
(iii) A rehabilitation plan has been developed for the borrow areas.
(iv) Noise barriers in 15 critical locations and specific mitigation measures for the
management of increased noise levels in other sensitive locations.
(v) Cultural property rehabilitation plan for all affected properties.
(vi) Specific construction safety and environmental management measures, such as
construction site management, camp site management, and occupational health and
safety measures to be implemented by the contractors.
48. The project affects about 55 physical and cultural properties along the alignment. Some
of these could be affected physically or access to such properties could be affected. All areas of
cultural and religious importance have been identified as part of the EA and specific measures
have been listed. These measures will be planned and implemented in consultation with, and the
close involvement of, local communities and other relevant stakeholders.
49. The EA was disclosed by DFCCIL on its web site
(http://dfccil.org/DFCC/Public%/20Notices/PublicNotices) on December 17, 2012 and at the
World Bank info-shop on January 7, 2013. The executive summary of the EA, along with the
EMP in local language (Hindi) was also disclosed at the local villages and districts as well as on
the DFCCIL website.
50. A separate analysis of measures required to mitigate the potential impacts of silicosis on
construction workers was carried out in EDFC 1, and specific measures were integrated in to the
bid documents of the project, for implementation by the contractor. These measures, including
the EMP, will be integrated in the bid documents of EDFC2.
23
51. Similar to EDFC1, construction of some ROBs/RUBs and other activities will be
undertaken by DFCCIL without Bank financing. These are physically linked to the project and
will comply with the requirements of project EMF.
52. An analysis of the potential to reduce GHG emissions was carried out in EDFC1, which
estimated that the eastern corridor will reduce about 13.19 million tons of GHG emissions by
2041-42, a reduction of 55 percent of GHG emissions from 23.29 million tons.
53. Supervision of environment safeguards. In addition to intensive implementation support
by the Delhi-based Bank Environment Specialist, DFCCIL will also carry out internal
monitoring through the Social and Environmental Management Unit (SEMU) based at
Headquarters and field staff. The Social and Environment Safeguards Monitoring and Review
consultants (SESMRC) will also carry out third party monitoring of safeguards implementation
and provide quarterly progress reports. These consultants will also undertake annual quality audit
of environment and social safeguards management, based on which necessary corrective
measures will be taken.
23 At present, only one has been identified at KM 692/15-17

35
Social Including Safeguards
54. EDFC2 will require land acquisition along the existing route for 40 meter ROW and for
60 meters ROW for crossovers and bypasses. Steps taken to minimize displacement include: (i)
detours to avoid impact on towns such as Fatehpur, Khaga, Sirathu, Barwari, Allahabad, Manda
and Mirzapur; (ii) reducing distance between IR and DFC tracks; (iii) ruling out service roads in
built-up stretches; (iv) providing retaining wall/fencing for DFC tracks with three meters passage
between habitations and retaining walls; and (v) re-modelling of yards and reducing distance
between yards and DFC tracks.
55. Social Impact Assessment. DFCCIL carried out an SIA through stakeholder
consultations as per the EDFC1 RPF, and in conformity with OP 4.12. EDFC2 requires 1,400 ha
of land, including 1,250 ha (89%) private land, and 150 ha government land. It will affect 13,034
families (64,000 people) including 12,466 who will lose their land. Of them, about 90% PAFs
will lose less than 0.15 ha of land; 14.6 % will become landless, marginal or small farmers. A
total of 623 structures are affected, of which 55 are community structures, and the rest are
residential or commercial properties. About 90 percent of structure owners, who will lose over
25% of built-up area, will be treated as displaced and will receive the full range of R&R benefits.
Traditional occupiers living on 'abadi' lands prior to 1961 have been recognized as title holders
and will receive compensation for their occupied land.
56. Resettlement Action Plan. Based on the SIA, DFCCIL has prepared and disclosed a
Resettlement Action Plan (RAP) establishing compliance with the RPF as agreed for EDFC1.
The Entitlement Matrix (EM) is same as the one instituted for EDFC 1, offering compensation at
market value along with 60 solatium24 and R&R assistance as per the National Rehabilitation and
Resettlement Policy (NRRP, 2007). The EM includes additional provisions offering latest
compensation rates in lieu of RAA, based on any act or notifications issued or procedure
established by a state government. The RAP is socially inclusive and gender sensitive with
special provisions. The entitlements framework provides 300 days of wages as livelihood grant
for the poor and the destitute, women headed families, widows and unmarried girls above 18
years of age, persons with disability, considered vulnerable people as per Clause 6.4 (v) of
NRRP 2007. DFCCIL will provide skill training for income generation to those below the
poverty line (particularly women shall be given priority).
57. Review of Resettlement Management Lessons. Resettlement planning for EDFC 1 was
affected by farmers' disagreement with the original alignment, requiring: a change in the
alignment and in the entitlement framework; and permitting those who lost land to opt for the
latest state R&R packages as an alternative. An adaptive approach to safeguards management
was adopted for EDFC 1 to allow course correction in resettlement policy and practice through
independent monitoring and evaluation arrangements. A resettlement quality review carried out
by a consultant, confirmed that those who were displaced received compensation and R&R
benefits. The review noted that: (i) there were wide community consultations; (ii) land survey
consultants demarcated impacts clearly; (iii) land records were updated and titles were
transferred with the compensation payment; (iv) grievances were handled by field staff; (v) land
titles were provided to traditional occupiers settled on village lands (abadi) prior to 1961; (vi)
monitoring and inter-agency coordination with the state governments were effective; and (vii)
skill training for income generation was imparted to affected youth.
24"Solatium" is an amount paid in excess of compensation to mitigate grief caused due to involuntary loss of land and assets.
36
58. DFCCIL has updated the RAP, which includes: (i) extending the scope of independent
structure price evaluators to provide advice on land value, as per the entitlements matrix (EM)
wherever required, especially in villages reporting wide variations in compensation; (ii)
extending livelihoods assistance as per Para 8 of EM to the land losers rendered landless or
marginal farmers, and those losing shops/businesses; (iii) dispelling confusion about jobs for
land losers; (iv) activating district GRC mechanisms, and improve GRC data management; (v)
enhancing implementation capacity by hiring NGOs, SESMRC, social scientist and additional
field staff; and (vi) strengthening livelihoods with skill training to the poor, eligible, and affected
youth.
59. Income Restoration. The RAP provides 750 days of wages as livelihood assistance to
those becoming marginal, or landless farmers, or those losing shops. DFCCIL has already started
a job skill training program for the affected youth along Eastern and Western Corridors, and will
prepare and implement a Skill Building Plan to strengthen income generation amongst the poor,
eligible and affected youth. This income generating initiative will focus on financial literacy,
skill building and entrepreneurship development for the affected people, in collaboration with
potential partners. DFCCIL will earmark a budget for this to support the initiative.
60. Institutional Arrangements. Implementation arrangements established for safeguards in
EDFC1 will be continued for EDFC2. The LA will be carried out by the State Government
officials appointed as the Comptetent Authorities and Arbitrators. SEMU will continue to
oversee the management of social safeguard measures, while the post of Social Development
Specialist will be filled at SEMU. At the field level, the Chief Project Manager (CPM) will
coordinate safeguard activities as Chief Resettlement Officer, with support from APMs for social
safeguards. The LA process is carried out with the support from the Land Acquisition
Consultants, who will undertake land surveys and coordinate with the local revenue department.
The Project Supervision Consultants will include social and environment specialists to oversee
coordination of civil works with RAP and EMP activities. DFCCIL will hire NGOs to assist in
community participation, livelihood and skill improvement activities and to support affected
people in articulating their grievances. DFCCIL will need to improve its field level capacity for
safeguards management.
61. Monitoring and Evaluation (M&E). Regular performance monitoring of RAP
implementation will be carried out by the internal oversight mechanisms of DFCCIL, in which
SEMU and the CPM office will have key roles. SEMU and the CPM office will be assisted by
PMC and the facilitating NGOs. DFCCIL will hire SESMRC for third party monitoring and
quality audit of LA and R&R measures. SESMRC will provide quarterly progress reports (QPR)
and yearly Safeguard Review Reports for follow up remedial action. The procurement process
for hiring SESMRC has been started.
62. Independent Grievance Redress Mechanism. The GRM for EDFC2 will remain the
same as for EDFC1. The Competent Authority for LA will be the first level for hearing and
resolving objections relating to land acquisition. Independent Arbitrators will hear and redress
grievances demanding higher compensation. The district level GRC will be the second level
GRM, chaired by the District Collector or her/his nominees, and comprising representatives from
civil society and the district local body. DFCCIL has issued detailed guidelines, including on the
scope of GRM's hearing of complaints relating to land use type, impact area, eligibility, and
structure and land valuation. At the corporate level, the Director, DFCCIL (Project Planning)
will chair the GRM and will have representatives from IR, DFCCIL, and the civil society. An
Ombudsman has already been appointed to address unresolved grievances.
37
63. Consultations and Disclosure. Public consultations were held with the affected people
during SIA and EA preparation in 326 villages and 41 Tahsils to disseminate information about
the Project, likely impacts and to elicit people's views for minimizing and mitigating impacts.
The consultations were held during July- December 2011 and follow up consultations were
carried out at key locations during July- September 2012. DFCCIL continues to hold community
consultations as a part of the land acquisition process with the help of NGOs hired to provide
implementation support at the field level. Key issues discussed during the consultations included:
(a) jobs for land losers; (b) payment of compensation at latest rates; (c) need to replace damaged
assets such as water pipelines; (d) difficulties with updating land records; (e) livelihood
assistance for those losing most of their land; (f) loss of religious properties; and (g) provision
for underpasses, etc. DFCCIL is carrying out follow up consultations with the help of NGOs
already hired. The RAP for EDFC2 has been disclosed on the DFCCIL's web site and also in the
Bank Info Shop on January 3, 2013. The RAP and its summary in Hindi are available for public
information at the field offices. The list of PAPs eligible for different R&R benefits will be
disclosed at the village and panchayat levels. DFCCIL has disseminated project information
brochures amongst the PAPs in villages explaining their entitlements and contact details of
GRM.
64. Social Safeguards Risks. The key social safeguards risks identified in the resettlement
audit include: (a) farmers' dissatisfaction with low compensation offered in some villages at
older circle rates; (b) income restoration of land losers; (c) delays in payment of R&R assistance;
(d) challenges in coordination with revenue officers of the state government; (e) poor public
awareness regarding GRM established at district and DFC levels; (f) inadequate field capacity
for LA and R&R; (g) disputes regarding eligibility for compensation and R&R benefits; (h) loss
of access to local roads; and (i) impacts on marginal farmers and vulnerable groups.
65. New Land Acquisition Legislation. The Government of India has enacted the Right to
Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act
in September 2013. While the Act states that Railway Act (2008) is exempt from the purview of
this new legislation, the applicability of this Act to linear projects will only be established once
the rules are notified. Nonetheless, the Entitlement Matrix adopted for the DFC project provides
for paying compensation as per the Railway Amendment Act (RAA, 2008) or any other policy or
legislation applicable in the State in which the land is acquired, whichever is higher at the stage
of announcing the award. The land acquisition for EDFC2 is at an advanced stage, with award
declared for 98% of the 1400 Ha required.
66. The key steps to mitigate the above risks are:
* Updating the RAP with guidelines for providing compensation at replacement value and
R&R assistance to various PAP categories as per their entitlements.
* Including skill training, financial literacy and entrepreneurship development in income
generation support measures.
* Hiring NGOs to assist in verifying R&R eligibility through community consultations and
assisting with R&R benefit distribution.
* Holding regular meetings with the UP Chief Secretary for effective coordination with
competent authorities and Arbitrators to resolve compensation issues.
* Wider dissemination of entitlements/ GRM through NGOs and using other technology
platforms.
* Expanding DFCCIL staff capacity in the field.
* Resolving eligibility disputes through proactive efforts by GRM and NGOs..
38
* Provision of minimum 3-meter wide service roads along railway tracks at habitations.
* Livelihood assistance for landless/ marginal farmers as per para-8 of entitlements matrix.
* Third Party R&R Monitoring and Quality Review through independent consultants.
* Award of contract and site hand over with clear linkage to progress in LA and R&R.
* Follow up stakeholder consultations by NGOs during implementation.
* Undertaking impact evaluations during the implementation phase.
67. Safeguard Policy Linkages. The safeguard policies of the Bank will apply to all
components of the project that result in involuntary resettlement, regardless of the source of
financing. It also applies to other activities resulting in involuntary resettlement, that in the
judgment of the Bank, these activities are: (a) significantly or directly related to the Project; (b)
necessary to achieve the project objectives as set forth in the project document; and (c) carried
out or planned to be carried out contemporaneously with the project. This will apply to critical
ROBs identified by MOR in PIM to be constructed through MOR and/or State Government
funding without Bank financing concurrent to this Project. In case of any other activities
fulfilling the above criteria, the Bank safeguard policies will apply. However, this safeguard
provision does not apply to the Western Dedicated Freight Corridor (WDFC) financed by JICA
as this is not directly or significantly related to the Bank financed corridor and it is already in
implementation. Also, the Western DFC with a separate route alignment is spread in a different
geographical zone and does not meet the safeguard policy linkage criteria outlined above.
68. Monitoring and Evaluation. The Monitoring and Evaluation (M&E) framework for the
project is defined by the Results Framework established during the preparation of EDFC1. A
functional MIS system integrator vendor is in place. In addition, a 'before and after' Impact
Study would be initiated subsequent to opening of the first stage of the Eastern DFC. Major
elements of data for the impact assessment will include railway operations, agricultural
production, and transport and power sector performance. It would establish the pre-
commissioning benchmarks and establish an appraisal methodology to capture a wider and
longer-term range of attributes and outcomes of the project (including new passenger train
services on existing lines). Terms of Reference for the impact assessment have already been
agreed between the Bank and DFCCIL as part of EDFC1. The logic framework and terms of
reference for the Impact Study are described in the PAD for EDFC 1.
39
Annex 4: Operational Risk Assessment Framework (ORAF)
Risk management:
Description: GOI is committed to this project due to its high visibility, scale and profile. The Bank will support GOI
Risk of project not moving forward due to insufficient leverage of efforts to secure financing to fill any gaps.
Bank funds to bridge the burgeoning gap in the DFC program's Resp: Stage: Due date: Status:
overall financing plan. MoR/Bank Implementation May 30,2015 In progress
2. . I AgnyRss(nldnfdcay
2.1. Capacity Rating: Substantial
Description: a)~~~ ~ ~ ~ ~ Rs
~ ~ ~ ~ WekcaaitnfaFCIgorpojcmmngeet,rviwo
a) Weak capacity of DFCCIL for project management, review of capacity. In addition, the PMC will continue to provide project management services during the EDFC2. All
designs and surveys. staff requirements for EDFC2 have been met as per the Human Resource Development Plan.
b) Inadequate FM staff, which is yet to get familiar with large b) DFCCIL has augmented its FM and is in the process of recruiting more staff at the level of GM, Manager
turn-keyquat & Assistant Managers; Some staff has undergone training in FIDIC and contract management principles and
strn-k e roetesd lupsu desin-builcontracts. FMaare Bank procedures and this will be continued periodically, specifically for new staff;, Finance Manuals (other
systems have to be tested as and when the contracts are awarded than Budget Manual) have been fully revised and updated. ERP development, including FM module, is in
c) Insufficiemeed. progress and is expected to be fully operational by end of June 2014.

c)Insuffcientrcuremeltntgaaiyaddly in award fcalarges c) While procurement related activities are ongoing, a stronger team needs to be in place given that several
complex contracts resulting in cost escalations.
d) Weak technical expertise within DFCCIL to review and cases have since reached the stage of invitation of bids/proposals. DFCCIL is taking steps to augment
spriethe design-build contract procurement capacity and related training.
suevieResp: Stage: Due date: Status:
DFCCIL Implementation. Continuous In progress
2.2. Governance Rating Substantial
Risk Management:
As part of EDFC 1, a robust Governance and Accountability Plan (GAAP) was prepared to mitigate these
risks, which will also apply to EDFC2; under implementation of the GAAP, compliance to corporate
Description: governance mandates (as required by the DPE) is monitored strictly, procurement capacity has been
Lack of robust corporate governance mechanisms, limited reinforced, the complaint handling system has been streamlined, the vigilance unit strengthened with stafF
Sresources and third party monitoring by Quality and Safety Audit Consultants (QSAC) initiated. A full Risk
procurment caity, ambowford
ios viaonc causes inp r Management team spearheaded by a General Manager (Risk Management), supported by outside consultants
doumnts thatorallownadequatemechanisms
di tn for inp to develop e dan integrated
so risk management system will be in place by implementation of EDFC2. An RTh
quaty ofran inm audit has also been conducted to identify systemic deficiencies in responding to citizen requests and the
recommendations of the audit are being taken up for implementation. Some new actions have been
proposed, specific to EDFC2, under a supplementary GAAP.
Resp: Stage: Due date: Status:
DFCCIL Implementation Continuous Ongoing
40
3.1. Design Rating: Moderate
Risk management:
Design-build contracts and two-stage bidding shift the design risks to the contractor, thus helping in cost
Description: effective design and also in capturing the latest technology.
Poor technical design results in high costs, failures and delays. Resp: tage: Due date: Status:
DFCCIL Preparation Appraisal Completed
3.2. Social & Environmental Rating: High
Risk management:
a) The Project affected shelters and businesses will be relocated within the villages. The resolution of the
'abadi' land issue has helped in providing title to traditional occupiers. LA award has been declared for 9000
of land, with 7200 of award disbursed to farmers. Addressing the issue of lower compensation with
Descrition:independent valuers will help to minimize court litigation and farmers' opposition to land acquisition. A
Description:
a) Delays in RAP implementation and land taking, which is combination of efforts providing livelihood assistance, income restoration support, skill training and
dependent on the cooperation of local authorities and the affected temporary employment in civil works to the eligible will help to minimize PAP resentments.
people. b) Compensation award for 980 of the 1400 ha land required has been completed. The RAP allows for
b) Stakeholder risks because of the large number of affected higher compensation payment under alternative legislations other than RAA (2008) in any state where land
people. The new Right to Fair Compensation and Transparency in is acquired. The RAP also allows for adapting to and addressing emerging concerns within its annual
Land Acquisition Bill (2013) may have implications for the independent safeguards quality audit review framework.
project's land acquisition and potential additional claims for c) The Bank will work with DFCCIL to ensure capacity building of SEMU and field level staff An
compensation. independent resettlement quality audit in January 2013 also recognized the entitlements framework as
c) DFCCIL has limited experience and capacity in implementing adequate and assessed that timely payments of compensation were made to PAPs. SESMRC will
the Environmental Management Plans (EMP). Compliance with monitor safeguard compliance. Monthly stakeholder meetings during the implementation period and the
EMP and social safeguards may be difficult to monitor. Complaint Handling System should enable direct reporting of any non-compliance by contractors.

MOR/Bank Implementation Continuous Ongoing
3.3. Program & Donor Rating: -LOW

Risk management:
Description: With regular donor coordination with JICA which is financing WDFC, the impact on EDFC of any
Implementation issuesEMPand challenges
nd ay
ocia
b dificut
saeguads montor DFC may
on t Western emerging issues on the WDFC can be minimized.
affect implementation of EDFC.pae une aat er State rl
monIof rd complceM ony sk O eg uring tn ontiod
3.4. Delivery Monitoring & Sustainability Rating: Moderate
Description: Risk management:
a) Weak contract monitoring and enforcement arrangements may a) MIS is under implementation to enhance M&E, facilitate online reporting for quick review and follow-up
adversely affect project implementation. enforcement of contractual provisions. It also enables tracking of status of payments to contractors.
b) Implementation effort will focus on civil works and b) The institutional development component is integral to the implementation of the civil works and so
institutional strengthening activities will receive less priority, cannot be ignored by DFCCIL. The Bank will monitor progress of both components carefully and provide
guidance on addressing any issues.

DFCCIL implementation June 2014 In progress
Preparation Risk Rating: Moderate Implementation Risk Rating: Substantial

Comments: Comments:
Some mitigation measures are in already in place for the risks identified for Some mitigation measures such as streamlining of operational procedures, formulation of
EDFC 1. Furthermore, EDFC2 does not envisage new components and as such the manuals, initialization of an ERP system and staffing of a Risk management team, systems
risks would be somewhat lower than for EDFC1, especially as the DFCCIL team for better monitoring and redress of RTIA requests and public grievances are in place;
would now be familiar with the project preparation processes/procedures and can however, considering that these are yet to be put to full use under EDFC1, the risk of
take proactive action to mitigate the related risks. implementation is rated substantial.
42
Annex 5: Implementation Support Plan
1. Strategy and Approach - The Implementation Support Plan (ISP) describes the support
required for implementation of all risk mitigation measures identified in the ORAF in order to
insure all major risks are addressed. The design of the project contains safeguards against each of
these risks. The ISP is designed to review and ensure that those safeguards are effective and to
reinforce them where necessary. It will also support institutional strengthening of DFCCIL and
assist both DFCCIL and IR to develop the capabilities, both technical and operational, to best
utilize heavy-haul freight capability. The financing for and scope of the Institutional Support
component of the Program as a whole was approved within EDFC 1 and will be implemented and
monitored progressively through the implementation of the Program (EDFC1-EDFC3).
2. The ISP will be undertaken by World Bank staff and is based on three major principles:
(i) continual high level policy dialogue with MOR and DFCCIL on institutional development;
(ii) frequent local level and field based supervision of project activities including frequent
consultation with project beneficiaries and (iii) consistent review of fiduciary procedures and
controls within DFCCIL.
3. ISP as described below, will be a live document and will be reviewed regularly and
revised as and when required during the implementation, at least on a half yearly basis.
4. Implementation Support Plan. Most of the Bank team members will be based in the
India country office including two co-task team leaders, which would facilitate timely, efficient
and effective implementation support to the client. International expertise will be drawn from the
Task Team Leader based in Washington DC and other specialized consultants as and when
required in various activities. Formal Implementation Support Missions and field visits will be
carried out semiannually. In addition, the implementation progress of the project will also be
reviewed through thematic implementation support missions and during the joint portfolio
review meetings by the Government of India and the Bank.
5. Technical Support for Component A. The Bank Task Team will include: (a) Country
based and International Railway Specialists and (b) International Heavy Haul Experts.
6. Technical Support for Component B: The Bank's task team will include Institutional
Development Specialist including international consultants. The specialist will follow up
periodically with the DFCCIL's counterpart on the main activity envisaged under this component
and will also monitor the progress to support DFCCIL-wide staff training in Heavy Haul Rail
Freight Systems.
7. Technical .The Bank will provide required technical support through sector specialist and
institutional, project finance and governance specialists to DFCCIL in finalizing technical
aspects of the engineering and bidding documents and formulating medium and long term
strategy related to improved planning, financing, and governance aspects. The implementation
support will be provided through at least two implementation support missions in a year and
through continuous exchange of correspondence and regular communication. Frequent use of
telecommunication including video conferencing, preferably once every two months, will be
availed of to maintain a close coordination among the Bank team and the project staff.
8. Procurement - During preparation of EDFC1 an assessment of DFCCIL's capacity to
implement project procurement was conducted. An update of the capacity assessment of the
agency was conducted for EDFC2 and it was found that DFCCIL's Procurement Cell has gained
experience in procurement under EDFC1 and this will significantly facilitate the procurement
process.
43
9. Procurement will be carried out by DFCCIL Procurement Cell. DFCCIL's General
Consultant (GC) would continue providing services throughout the bidding process until the bid
evaluation report and the contract award recommendations have been completed and Bank's 'no
objection' given. DFCCIL's legal advisor will also review documents and process. DFCCIL will
also put in place additional arrangements for continuous and sustained quality assurance and risk
mitigation during the bidding and implementation process. Consultants will be employed using
available funds under EDFC1 to the extent possible. These assignments will include: Quality and
Safety Auditing Consultant (QSAC). A total bidding period of 14 months from Bank's clearance
of the prequalification evaluation report to the award of the contracts for civil works and track is
envisaged for the civil works based on the agreed model time schedule.
10. Implementation support will include: (a) reviewing procurement documents and
providing timely no objection; (b) providing detailed guidance on the Bank's Procurement
Guidelines to DFCCIL's staff; (c) monitoring procurement progress against the detailed
Procurement Plan; and (d) identifying the capacity building/training need for DFCCIL's staff on
procurement processing and providing training if required. The support will be provided through
regular interactions, regular half-yearly implementation support missions and thematic
implementation support missions, if required.
11. Financial Management. A Corporate Governance and Financial Management
assessment (CGFA) for DFCCIL was conducted during preparation of EDFC 1, which has been
updated for EDFC2. The activities in the action plan agreed during preparation of EDFC1 for
addressing gaps in CGFA is in various stages of implementation. The final Project Financial
Management arrangements will be documented in an updated Project Implementation Manual.
DFCCIL is still growing and maturing as a company and staff and systems will be tested against
the large-scale construction activities associated with the EDFC program and will be
strengthened as necessary.
12. Implementation support will review the project's financial management system, including
but not limited to, accounting, reporting and internal controls. The broader integrity risks as
regards to the financial management aspects will be also addressed as part of the GAAP
implementation. The support will be provided through regular interactions, regular half-yearly
implementation support missions and thematic implementation support missions, if required.
13. Environmental and Social Safeguards. The Bank safeguards specialists in the team will
supervise various activities to ensure full compliance with the Bank's operational policies /
procedures and the agreed framework related to environment and social safeguards aspects. The
implementation support will be provided through regular interactions, regular half-yearly
implementation support missions and thematic review missions, if required and in full
cooperation with the technical members of the Bank team.
14. The Social and Environment Management Unit (SEMU) of DFFCIL will play a
coordinating role with hiring NGOs for field level implementation support and Social and
Environment Safeguards Monitoring and Review Consultant (SESMRC) for third party
monitoring and quality audit. The Chief Project Managers (CPM) will continue to operate as
Chief Resettlement Officers, assisted by a number of Assistant Project Managers (Social). A
multi-stage Grievance Redress Mechanism will handle PAP grievances: (i) at the level of APM
(Social), (ii) at the district level, (iii) and at the DFCCIL level. The Competent Authority
appointed for carrying out LA will hear and resolve preliminary objections/grievances, whereas
Revenue Commissioners appointed as Arbitrators will hear PAP claims seeking higher
compensation. DFCCIL has appointed an Ombudsman to hear any outstanding grievances with
44
regard to the RAP implementation, and is in the process of hiring NGOs, SESMRC and
appointing District-GRCs for EDFC2.
15. In order to support DFCCIL in the effective implementation and good governance under
the project, the task team will undertake enhanced supervision in the areas of implementation of
GAAP and institutional strengthening activities and closely monitor the procurement process and
contract management under the project. This support will be primarily provided by the
Governance specialist with adequate assistance from FM specialist, Procurement Specialist and
other team members. The main focus of resource estimate is summarized below:
45
Time Key elements Skills Resource Estimate
Needed
First Quality of implementation: Ensure that Procurement, 8 staff
12 preparation of environmental screening reports, financial weeks
months EAs/EMPs, RAPs for the second-year activities management,
has the required quality; implementation of resettlement action environment,
plans complies with World bank safeguard policies; social development
information is disclosed on the project website; quality and railway sector
assurance plans in civil works contracts are in place. specialists
Governance and accountability: Ensure that project Transport economist, 4 staff

management systems (financial management, contract Governance weeks
administration) are in place; integrated performance audit is Specialist
launched; Random review of check-list of red flags provided
with bid evaluation reports.
Institutional
Institutional development: Review of terms of reference for Development 8 staff
consultants selected to implement activities in the institutional Specialist weeks
development component.
12-48 Quality of implementation: Review quality of works, Procurement, 12 staff
months compliance with fiduciary and safeguards policies; quality financial weeks/year
assurance plans in civil works contracts management,
are in place; environment,
Ensure that preparation of environmental screening reports, social development,
EAs/EMPs, RAPs for subsequent year activities has the and railway sector
required quality; specialists
Review monitoring indicators, implementation performance
and achievement of objectives;
Governance and accountability: Implementation of Governance Specialist 4 staff

resettlement action plans complies with World bank safeguard weeks/year
policies; information is disclosed on the project website;
integrated performance audit is carried out;
Institutional development: Review implementation of Institutional

institutional component; quality of advisory services provided Development 12 staff
as part of the institutional development component. Specialist weeks/year
46
16. Staff skill mix required is summarized below:
Skills Needed Number of Number Comments
Staff Weeks of Trips
Technical Specialist 56 20 Country office based/ HQ based/ International Specialist
Institutional Development Specialist 56 20 Country office based/ International Specialist
Procurement Specialist 56 20 Country Office Based
Social/ Environment Specialists 56 20 Country Office Based
FM Specialist 56 10 Country Office Based
Governance Specialist 20 10 Country Office Based
Task Team Leader and Co-Task Team Leaders 60 12 Country Office Based/ HQ Based
47

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FOR OFFICIAL USE ONLY

Report No: PAD470

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

PROJECT APPRAISAL DOCUMENT

TO THE DEDICATED FREIGHT CORRIDOR CORPORATION OF INDIA

EASTERN DEDICATED FREIGHT CORRIDOR 2 (EDFC2) PROJECT

INVESTMENT PROJECT FINANCING - SERIES OF PROJECTS

Sustainable Development Department

ABBREVIATIONS AND ACRONYMS

EASTERN DEDICATED FREIGHT CORRIDOR 2(EDFC2) PROJECT

PROJECT APPRAISAL DOCUMENT

Project Financing Data

International Bank for Reconstruction and

Total: 550.00 1,100.00 1,650.00

Project Implementation Period: 6 years

Have these been approved/ endorsed (as appropriate by Bank [ X ]Yes [ ] No

Project Development objective Ref

(a) Design, construction and commissioning of the Kanpur-Mughal Sarai section of

Name: Recurrent Due Date Frequency

Name: Recurrent Due Date Frequency

Name: Recurrent Due Date Frequency

Name: Recurrent Due Date Frequency

Name: Recurrent Due Date Frequency

1Gross fixed capital formation as a ratio of GDP at current prices.

* Readiness milestones for EDFC2 * Readiness milestones for EDFC3

B. Program and Project Beneficiaries

Implementing Agency Design Moderate

Capacity Substantial Social and Environmental High

Governance Substantial Program and Donor Low

Delivery Monitoring and Sustainability Moderate

Overall Risk Rating: Substantial

33. Factors mitigating the above risks are:

VI. APPRAISAL SUMMARY

A. Economic and Financial Analysis of EDFC2

Total 393 250+143 372 1400 12,466 11,185 507 55

INDIA: Second Eastern Dedicated Freight Corridor Project (EDFC2)

Data Source/ Responsibilit Description (indicator

construction: civil by value operation monitoring

construction: by value operation monitoring

Slice Total length Characteristics

At present, this is not a part of the estimated project cost.

A. Project Administration Mechanism

1. Construction of the Eastern DFC Program will be administered by DFCCIL's

Financial Management, Disbursement and Procurement

9. Corporate Governance. A Corporate Governance Financial Assessment (CGFA) of

Table 8: Status of Implementation of DPE Code of Corporate Governance in DFCCIL

Model Code Current Status in DFCCIL

b) Qualified and independent Audit Committee

Disclosure on risks and concerns shall from part of

10. Financial Management and Disbursement. At the time of preparation of EDFC1,

Agency Audit Report Audited by Due Date

Category Amount Allotted Percentage of

Table 11: Updated Action Plan (continuing from EDFC1)

Area of Action Actions required for Action/s completed Action/s to be completed

Strengthen Human Resource Management

Customized business solutions ERP ,