The Indian Railways plans to buy at least one-third of its requirement of diesel locomotives from a new joint venture unit controlled by a private sector firm, according to terms listed in a request for qualification (RFQ) for this factory released in August. The new diesel locomotive factory is to come up at Marhowra in Bihar.
The RFQ guarantees that the railways will buy 100 locomotives a year for the next seven to 10 years from the Marhowra facility. It also expects to acquire another 250 diesel locomotives a year from the state-owned Diesel Locomotive Works in Varanasi.
The RFQ mandates a two-stage tendering process to select the company that will be allowed to set up the Marhowra factory. In the first stage, companies will be shortlisted on the basis of their ability to build and run the facility. The actual bid will come in the second stage. Mint had earlier reported the two-stage tendering process for the new factories the railways planned to set up with private firms and on the possibility of these factories receiving guaranteed orders. The railways will hold a 26% stake in the new units.
“The process for selection of the private partner should be complete in a couple of months. The (railway) ministry will also be soon going ahead with its plans for opening new units to set up a coach (factory) and another locomotive factory,” said Amrit Pandurangi, executive director at PriceWaterhouse Coopers, the audit firm that is advising the ministry of railways on the joint venture projects. Senior officials at the railways say that private sector firms are unlikely to be interested in bidding for the project in the absence of guaranteed orders.
“There is simply no other buyer for the new units and since it is the Indian Railways that is initiating the setting up of the new factories, we also have to see that these units continue to do well,” said one official. The official, who did not wish to be named, added that existing factories operating under the railway ministry would continue to receive offers.
“We simply cannot meet the demand for locomotives or coaches from the existing units and the additional demand would be met through the new units,” he added.
In the RFQ, the railways said only companies that have manufactured and supplied over 1,000 diesel electric locomotives would be considered for selection. The railway ministry has also specified that it is interested in 6,500 hp locomotives.
Railway officials said it was likely that these heavy-haul locomotives would be used on the proposed dedicated freight corridor where there was a plan to increase carrying capacity of freight trains.