Foreign companies back out of big-ticket railway projects

Three key projects of Indian Railways involving an investment of Rs 21,737 crore will now be entirely funded by the railways, as the short-listed foreign manufacturers have backed out in the backdrop of ongoing economic downturn.

It was only a fortnight earlier that the Cabinet, in a press release, named five short-listed bidders for two projects to be implemented in Bihar. The railway ministry had proposed to set up joint venture companies to develop the factories, with an equity stake of 26 per cent in these.

“There was no adequate response... the response was poor perhaps because of the meltdown,” Home Minister P Chidambaram said today.

Now, with the foreign partners backing out, the railways will have to fund the entire equity portion and also arrange for the debt portion.

The projects include a rail coach factory at Rae Bareli in Uttar Pradesh at an investment of Rs 1,685 crore, an electric locomotive factory at Madhepura in Bihar at a cost of Rs 18,000 crore and a diesel locomotive factory at Marhowra in Bihar, Chidambaram said today.

While Rae Bareli is the Lok Sabha constituency of UPA chairperson Sonia Gandhi, the other two locations are based in Railway Minister Lalu Prasad’s constituency in Bihar.

A government release on February 5 had said that Alstom, Bombardier and Siemens were short-listed as bidders for the electric locomotive factory, while GE and EMD were short-listed for the diesel locomotive factory.

Chidambaram said that Indian Railways would import 50 electric locomotives of about 12,000 horse power, while the rest will be manufactured. In the same way, 50 diesel locomotives of 4,500 to 6,000 horse power will be imported, at an estimated cost of Rs 600 crore. “The imports will also involve transfer of technology,” added Chidambaram.

According to the railway ministry plans, the electric locomotive factory was to produce 800 units, while the diesel factory was to manufacture 1,000 engines.