Railways to buy 660 electric engines for €3.5 billion

Railways to buy 660 electric engines for €3.5 billion
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First Published: Tue, Jul 08 2008. 09 45 PM IST

Mega deal: A container train. The new electric engines will be used on the planned dedicated freight corridors, and for hauling cargo on other lines. (Photo: Ramesh Pathania / Mint)
Mega deal: A container train. The new electric engines will be used on the planned dedicated freight corridors, and for hauling cargo on other lines. (Photo: Ramesh Pathania / Mint)
Updated: Tue, Jul 08 2008. 09 45 PM IST
Mumbai: In one of the largest deals of its kind, India will buy 660 electric railway engines worth an estimated €3.5 billion (about Rs23,835 crore).
The railway ministry—in its biggest ever global tender, floated on 12 June—invited bids from firms that would not only supply these high-speed engines but also build a locomotive factory in Madhepura, Bihar, at an estimated cost of more than Rs1,000 crore. The factory will have an installed capacity to produce 1,000 electric engines a year.
Mega deal: A container train. The new electric engines will be used on the planned dedicated freight corridors, and for hauling cargo on other lines. (Photo: Ramesh Pathania / Mint)
The last date for submitting requests for qualification is 18 July, and the price bidding is expected to start from 25 July.
The railways could also raise the number of locomotives it would buy by 25%, said a person familiar with the development, who requested anonymity because he is not authorized to speak with the media.
Global companies such as Bombardier Inc., Siemens AG, Alstom GmbH, Mitsubishi Heavy Industries Ltd, Toshiba Corp. and CSR Zhuzhou Electric Locomotive Works Co. Ltd of China are keen to participate in the project, the person said. State-run Bharat Heavy Electricals Ltd is also considering participating, he added.
Mint had reported on 1 February the planned purchase of the locomotives and the proposal to set up the factory in Madhepura.
Details of the order for locomotives came to light after the railway ministry issued a request for proposal, or RFP, to appoint consultants to prepare bid documents for the tender. In the RFP document, the railways said the purchase contract will be for 1,000 engines to be bought over eight years.
“Considering the scale and nature of the project, Indian Railways has dropped the idea of just forming a private-public partnership for acquiring these locomotives,” the person said. “The authorities have introduced a concept of long-term procurement-cum-maintenan-ce of electric locomotives.”
Under this regime, the winning company or consortium would have to supply 12,000hp electric locomotives over eight years, and maintain them for 20 years.
“The new concept is a welcome step,” said Rajeev Joti, president and managing director (India, transportation), Bombardier Transportation India Ltd. “This will enable companies to look beyond just supplying the locomotives and open up new avenues of business without compromising profitability.”
The engines would be deployed on the dedicated rail freight corrridors India is building, besides hauling cargo on the common rail network. India’s 2,700km-long dedicated freight corridor project was conceived in 2005 as a way to ease traffic on some of the country’s busiest freight routes running through 12 states. The corridor will connect New Delhi in the north to Mumbai in the west and Kolkata in the east. These routes account for 60% of the freight transported by the railways, which had initially estimated the project to cost around Rs28,000 crore.
The railways may pick up a 26% stake in the joint venture company that will build the locomotive factory.
The government is likely to offer land to the joint venture on a 35-year lease. “The ministry of railways has started land acquisition (for the Madhepura factory),” said an executive of a company that plans to bid for the project, on the condition of anonymity. “We hope the authorities will ensure better logistics to connect Patna and other important stations.”
The railways estimates it will need about 1,800 locomotives over the next five years, and the ministry is concerned it may be able to meet only half the demand through the Chittaranjan Locomotive Works, or CLW, located in West Bengal. CLW, owned by the ministry, currently has a capacity to manufacture about 150 electric locomotives a year. This is being increased to 200 a year.
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First Published: Tue, Jul 08 2008. 09 45 PM IST