New Delhi: A prestigious Rs30,000 crore project to set up two new locomotive manufacturing units is likely to be relocated to West Bengal, home state of railway minister Mamata Banerjee.
This follows an internal review by the Indian Railways after Banerjee took charge as the new minister. Another change is that the project could now come up in partnership with the private sector.
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The project has enormous potential to generate investment and employment and would be politically critical for Banerjee and her party, the Trinamool Congress, as they prepare to challenge the Communist parties in the 2011 assembly elections.
New direction: The Rs30,000 crore locomotive project has come under review after Banerjee took over. Deshakalyan Chowdhury / AFP
The project was conceived during the tenure of former railway minister Lalu Prasad, who had proposed that a diesel locomotive factory be set up in Marora and an electric one in Madhepura—two towns in Bihar, his home state. He had also, after several contentious internal debates and differences with other ministries, decided that it be financed through the resources of Indian Railways.
However, after the change of guard in the ministry, railway board officials concerned say the project may now be set up as a joint venture.
The ministry officials indicated that the board was open to the idea of relocating the factories as well.
“The Planning Commission has suggested that these projects be taken up as PPPs or JV. We are discussing the matter within the board,” said a senior railway official who did not want to be identified. PPPs are public-private partnerships and JVs are joint ventures.
The official said it was possible that the project could be shifted out of Bihar, but declined comment on whether the new location could be West Bengal.
“The cabinet has the power to decide where these projects should be situated. A decision on shifting the location of these factories would be a political decision and they can take a call on relocating the two projects if required,” said another railway official who also did not want to be identified.
Railway minister Banerjee could not be reached for comment.
“We would be happy if these projects were to be located in West Bengal. However, the final decision on this vests with the railway minister,” said Trinamool Congress leader and minister of state for urban development Saugata Ray.
If indeed the railways does go ahead with its intent, then the project would have come a full circle.
Although the two projects were conceptualized in late 2006, it was only in early 2009 that the railways started the bid process to select private players to operate these units.
The railways had issued a revised draft request for proposals (RFPs)—essentially guidelines for final price bids—in the last week of January, with a deadline of 16 February. Cabinet approval for this came only on 5 February.
Of the five companies selected for the price bids, only Siemens AG and US-based conglomerate General Electric Co. (GE) submitted a bid each for the two projects. Some of these companies who failed to submit a bid had said they were given too little time to arrive at a price.
Owing to the poor response from the private sector during the bidding in February, the ministry was forced to propose these projects as departmental units.
A senior executive with one of the companies which was initially in the race for one of the two locomotive projects said there was no logistical or technical reason for the factories to be situated in Bihar. “It was purely a political decision,” said this executive, who did not want to be named.
“The decision to set up these factories was a political one in the first place. And even if the decision is to be reviewed by the new administration, political considerations are likely to play a role in deciding the location of the factories once again,” said former railway board member Ramesh Chandra.