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New Delhi: Indian Railways may have informally put on the back burner two marquee projects to manufacture electric and diesel locomotives at Madhepura and Marhowra, respectively, in Bihar, according to a senior railway ministry official and two industry executives with direct knowledge of the matter. Neither the official nor the two executives wanted to be identified.

Wielding influence: West Bengal chief minister Mamata Banerjee. By Rupak De Chowdhuri/Reuters

The railway official and one of the industry executives cited said West Bengal chief minister Mamata Banerjee had informally asked Kul Bhushan, member (electrical) on the Railway Board, to expedite the Dankuni project and keep the two controversial projects in Bihar on hold, at least for the time being. Banerjee, leader of the Trinamool Congress (TMC), is a former railway minister. The current railway minister Mukul Roy is also a member of the TMC, a regional party based in West Bengal and an ally of the Congress-led United Progressive Alliance government.

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Mint’s Aman Malik says the railways appears to be going slow on two railway projects in Bihar in favour of one in Bengal, possibly because of political pressure.

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Another senior railway official independently confirmed that the meeting involving Banerjee and Bhushan did take place.

Bhushan declined to comment on the matter.

Mint could not independently verify what exactly transpired at the informal April meeting.

The other industry official said railway officials had informally told him that the Dankuni project was being fast-tracked and so the two projects in Bihar were likely to be taken up only after that. “The last we formally heard from the railways on the two projects was in November-December last year. Since then, there has been no official word," he said.

The proposed plant at Dankuni, expected to be developed on the lines of Chittaranjan Locomotive Works, will have a capacity to manufacture 200 locomotives a year, the same as the proposed units at Madhepura and Marhowra together. “So, there is a good chance that the two projects may eventually be shelved, if the Dankuni project takes off," the second industry official said.

Several other railway officials said Banerjee still wields influence in the ministry. Banerjee and Roy could not be reached for comment despite several attempts.

To be sure, no official decision to put the cabinet-approved projects on the back-burner has actually been taken yet.

In fact, any such decision is unlikely to be taken unilaterally by the railway ministry since it involves other arms of the government, including the Planning Commission, the finance ministry and the Prime Minister’s Office (PMO).

In fact, a senior executive with a leading consulting firm said that RITES Ltd, the railways’s in-house consulting arm, had invited it and other consultants to bid for offering their services for the Marhowra project. This executive said that a letter to this effect had been received on Monday. “We are not looking at bidding for this contract. The railways typically ask consultants to come on board for six months, but these contracts linger on forever," he said.

Till recently, Grant Thornton International had been consultant to the railways on the Bihar projects, which were announced by then railway minister Lalu Prasad in 2006. Prasad belongs to Bihar and is a former chief minister of the state. Grant Thornton didn’t respond to queries for comment.

The total estimated value of the Bihar project contracts for 800 electric engines and 1,000 diesel ones is $13 billion (around 70,590 crore today). The value of the projects is based on the price of the engines, design costs and expenditure on establishing the proposed units.

Four firms—General Electric Co. (GE), Alstom SA,Bombardier Inc. and Siemens AG—are competing for the electric engine contract. A joint venture between GE and Bharat Heavy Electricals Ltd (Bhel) is competing with Electro-Motive Diesel Inc. (EMD) for the diesel engine contract. The projects have been conceived as public-private partnerships, with the railways holding a 26% stake in each.

“We have been participating in the new tender process, which started in early 2010; last discussion we had on these projects with the railways was in December 2011," said Pratyush Kumar, president and chief executive officer of GE Transportation in India. “We hope that the ongoing tender process will be concluded openly, fairly and in a timely manner."

Bombardier Transportation India spokesperson Harsh Mehta said: “Bombardier is following these projects as our recent investments demonstrate that we are committed to the development of rail transportation in India, where we have built capabilities covering complete range of railway vehicle manufacturing, software engineering and development along with customer service competencies."

Siemens, Alstom and EMD declined to comment.

Incidentally, the railways is in the process of tweaking the draft production-cum-maintenance agreements for the two projects and seeking cabinet approval for the same. Mint reported this on 17 November.

Mint has reviewed internal railway documents that outline the changes that the ministry may make to the contentious documents, a move that has generated heated debate within government circles in the last few months.

On 23 March 2011, The Financial Express newspaper, citing unnamed government officials, said that the Planning Commission and PMO were monitoring the Marhowra project closely, after information that one of the bidders was trying to influence the bidding process for the project.

Mint first reported on 27 June 2011 that there were serious differences between the finance and railway ministries over several aspects of the draft documents, including the price the companies can charge for the engines.

Following this, on 12 March 2012, The Pioneer newspaper reported that the railway and finance ministries were opposed to the Plan panel’s suggestions to alter the cabinet-approved bid documents and supply conditions, saying that these changes would put an extra burden of 16,405 crore on the exchequer. Mint has reviewed the documents cited by The Pioneer.

Gajendra Haldea, adviser to Planning Commission deputy chairman Montek Singh Ahluwalia, declined to comment.

In a related development, the railways is considering floating an open tender for any additional annual requirement of locomotives, over and above what is manufactured by its own factories.

Typically, the railways contracts out its additional requirements to Bhel on a nomination basis. In effect, the company typically gets an order of about 50 locomotives a year from the railways.

aman.m@livemint.com

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