News reports on recent developments in the Indian Rail tenders for electric and diesel locomotive factories at Madhepura and Marhoura

The Hindu Business Line at http://www.thehindubusinessline.com/economy/will-diesel-locomotive-factory-sidetrack-indiaus-talks/article6108296.ece

Will diesel locomotive factory sidetrack India-US talks?

Mamuni Das

New Delhi, June 12:  

As India and the US get ready for a meeting of its two leaders, a simmering issue of constructing a diesel loco factory in India has the potential to snowball into a clash of interest in their respective political constituencies.

The proposal is with regard to building a diesel locomotive factory in Marhowrah, Bihar. A project which two American firms, GE and EMD, have been eyeing since the time the UPA-I was in power. EMD is based in Illinois, Obama’s former constituency.

The Railway Union has expressed reservations on setting up of a project with private investments. Besides, this project, if it becomes a reality, could pose a threat to the existing factory in Varanasi, Prime Minister Narendra Modi’s constituency.

Obama’s keenness for this project can be gauged from the fact that during his 2010 visit he had specifically referred to this locomotive project in the context of two American firms getting shortlisted to bid for the project.

Since then bids for the project have been called for many times for multiple reasons.

The Indian Railways network is one of the largest railway markets globally. For EMD, now a subsidiary of Caterpillar, India is a larger market than China.

“India is the one of the largest railway markets after North America,” William P Ainsworth, President and CEO, EMD, had told Business Line. Prior to that, GE’s Jeff Immelt had voiced his frustration on the pace of decision-making in India when asked about the delay in this project.

Union’s worry

But the Railways employees union has voiced its concern. The tender conditions for new factories involve long-term assurances to buy a minimum quantity of locomotives annually and this can well impact the Railways’ existing production unit, such as the Diesel Locomotive Unit, Varanasi, which could become idle during a slowdown year.

“If there were to be idle capacity at Indian Railways’ production units, what will happen to the employees? Will the Railways and Indian Government continue to bear staff cost of such large facilities,” asked Shiv Gopal Mishra, General Secretary, All India Railwaymen’s Federation.

Interestingly, when the US President had made a reference to this project during his India visit, he had underlined the fact that two American firms were shortlisted for the project – in effect ensuring that at least one American firm would get a pie of the growing Indian Railways market.

But now, Chinese firms — CSR and CNR— have also joined the race and are competing with GE and EMD for the same tender. If Chinese players are to be shortlisted for the diesel loco bid, the American firms have to face pricing pressure from the Chinese firms.

The Chinese were also competing for an electric loco tender of the Railways with Americans and the Europeanfirms, but were disqualified.

The two tenders (diesel and electric) were valued at about ₹35,000 crore over a 10-to-11-year period, according to industry estimates. Given the high stakes involved, it would be interesting to watch the status update on this project when the two leaders meet.

(This article was published on June 12, 2014)

Printable version | Jun 21, 2014 8:13:56 PM | http://www.thehindubusinessline.com/economy/will-diesel-locomotive-factory-sidetrack-indiaus-talks/article6108296.ece © The Hindu Business Line

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The Financial Express at http://www.financialexpress.com/news/madhepura-loco-plant-finally-back-on-track/1259588

Madhepura loco plant finally back on track

Rajat Arora Posted online: Thursday, Jun 12, 2014 at 0000 hrs

New Delhi : The long-stalled proposed Madhepura rail locomotive factory in Bihar, to be built under the public-private partnership mode, has gained some traction with the railways finally shortlisting multinationals Bombardier, Siemens, Alstom and General Electric for the R1,300-crore project. The project is likely to be awarded in September, heralding the use of the PPP model for expanding India’s rail network.

“Six companies had applied for the project. Four of them meeting our requirements have been shortlisted. Request for proposal document will be issued soon, after which the final selection will be made,” a Railway Board member told FE.

The proposals of two Chinese companies — CSR and CNR — were rejected as they did not meet the technical criteria.

The criteria for qualification for the projects include the condition that the companies applying should have supplied locomotives to at least three countries.

The shortlisting for the electric loco factory in Madhepura was to be done in September last year.

The national transporter says the delay happened as it had to verify the claims of applicant companies with the countries where they have been operating. “We had to check with around 34 countries where these companies have supplied locomotives and this process took a lot of time,” the Railway Board member said.

Meanwhile, the shortlisting for the Rs 1,200-crore diesel locomotive factory in Marhowrah, also in Bihar, will also be announced soon. GE, EMD of the US and China’s CSR and CNR are in the fray for the project.

The fresh request for qualifications (RFQs) for both projects were issued in May last year after a Cabinet nod. The two locomotive projects were first announced by in 2006 by then railway minister Lalu Prasad, and the tendering process was initiated in August 2008. Four companies were initially shortlisted for the electric locomotive project. In 2009, the RFP was approved by the Cabinet, but only one bid (GE) came in.

So the railway ministry went back to the Cabinet, saying that the joint venture route didn’t materialise and asking for the permission to take the public undertaking route for the project, for which the Cabinet gave its approval. This was just before the 2009 general elections.

After UPA-II came back to power, the railways again approached the Cabinet saying the market had improved and going ahead with a joint venture would be beneficial. When bids were invited, four companies came forward but an empowered committee set up for the project wanted some changes (like transfer of technology and maintenance) made in the bidding documents after considering the concerns of bidders. Against this backdrop, an empowered group of ministers was formed, which was of the view that since a lot of conditions in the bidding documents were to be changed, it was better to go for fresh bids. The approval for fresh bids came in May last year after which a RFQ was issued.