US loco giant pits Montek against planners - J Gopikrishnan of the Pioneer newspaper

US loco giant pits Montek against planners

Author: J Gopikrishnan
Publication: The Pioneer
Date: March 19, 2012
URL: http://dailypioneer.com/home/online-channel/360-todays-newspaper/50852-us-loco-giant-pits-montek-against-planners.html

In the midst of political turmoil over the railway fare hike, an intense fight is going on in higher echelons of bureaucracy over the selection of bidders for two locomotive factories that then Railway Minister Lalu Prasad Yadav had announced for his parliamentary constituency in Bihar in 2009.

In the 2009 Railway Budget, Lalu had announced setting up of one electric locomotive factory at Madhepura and another diesel loco factory in Marhowra on PPP model.

The process of selection of bidders has pitched two key Ministries - Railways and Finance - against the Planning Commission. Top officials of Railway Board and Finance Ministry have objected to the proposals of Plan panel to change the Cabinet-approved bidding process and supply conditions for these two pending projects, which have reached nowhere in three years.

The official communication and file notings available with The Pioneer show that top officials of Railway Board and Finance Ministry protested over the changing of the Cabinet decisions to favour certain bidders by Plan panel deputy chairman Montek Singh Ahluwalia's Advisor Gajendra Haldea.

For executing the bidding process, the Cabinet in 2009 formed an Empowered Committee consisting of officials drawn from Railway Board, Finance Ministry and Planning Commission. The controversies started when Haldea mooted some changes last year in the Cabinet-approved proposal.

In case of Madhepura project, senior officials of the Railway Board and Finance Ministry noted down that the minutes of the meeting were also "changed" and "misquoted" to propose major changes in the bidding documents to favour the US giant, General Electric.

In a series of communications between the Empowered Committee members, Finance Ministry and Railway Board officials have stated that Haldea's proposal to change the Cabinet approved bidding procedures and supply conditions would place an extra burden of more than Rs16,405 crore.

Sources told The Pioneer, in several meetings of the empowered group, heated exchanges took place and some members alleged that these changes were introduced to suit General Electric - the lone bidder for the project.

In the bidding process of Marhowra project also, top officials of the Railways and Finance Ministries protested Haldea's high-handedness. "Haldea apparently thinks that India is a Banana Republic that can be forced to accept a con game….," noted Sanjiv Handa Member (Mechanical) of Railway Board in a note seen by the Railway Board Chairman.

In the same note, Additional Member (Production Unit) SK Sharma of the Railways wrote that "it is unfortunate that professionalism, probity and regard for highest standards of integrity of the mechanical directorate are being questioned by resorting to sensationalism, misinformation and slander, rather than reasoned debate. It is for the investigators to determine whether this was part of a larger agenda aimed at compromising the Indian Railways interest."

The Finance Ministry officials also expressed displeasure on changing of Cabinet-approved bidding and supply conditions. A Railway Board note of June 28, 2011 read, "Economic Affairs Secretary R Gopalan specifically asked financial commissioner the decisions of the Empowered Committee at the behest of the bidders will need to be seen with regard to their financial aspects so as to ensure that gaming by the bidders is ruled out and Railways interest will not be compromised. The minutes do not include these concerns of the Secretary, Economic Affairs."

In a communication to Montek on February 9, Planning Commission Member Secretary Sudha Pillai questioned the authority of Haldea for approving the changed proposals, which he himself mooted.

"Subsequently, several amendments that were proposed to the terms approved by the Cabinet were also admittedly authored by him. These proposals altering the terms of the proposed contracts in significant ways were quickly endorsed by the Infrastructure Division (headed by Haldea), bypassing me on some occasions.

"However, these amendments when subjected to detailed discussion and scrutiny by the Empowered Committee were found to have serious implications which had not been adequately addressed. It was clear that these amendments were not subjected to independent and impartial scrutiny. This created a very embarrassing situation for me as a member of the Empowered Committee," said Sudha Pillai in a communication to Montek.

Tug of war

* Montek's Advisor Gajendra Haldea moots changing of Cabinet approved bidding and supply conditions for Madhepura Electric Locomotive Factory

* Finance, Railways officials and Planning Commission Members protest and say these changes are to favour US giant General Electric at an extra burden of Rs16,405 crore

* Empowered Committee of Cabinet objects to Haldea's proposals

* Railway officials also protest against Haldea's suggestions on Marhowra Diesel Loco Factory