Rlys Take Lease Rental Route To Export Surplus Locos
Indian Railways (IR) has began exporting surplus rolling stock by using competitive financing packages. This is the first time that the railways is actually using such methods for disposing such stock.
IR has so far exported about 36 metre-gauge diesel locomotives to the Malaysian Railway. These locomotives have become surplus after conversion of metre gauge railway network in the Southern Railway to broad-gauge under Project Unigauge, a programme launched by the railways to have uniform broad-gauge tracks throughout the country. IR has transferred the locomotives to Indian Railway Consultancy Services (Ircon), which in turn has leased these to the Malayasian Railways.
Officials say that the lease rentals for these locomotives had been fixed at Rs 25 lakh per month for every locomotive. The exports were generating an annual foreign exchange inflow of approximately Rs 8 crore per annum by way of lease rentals alone.
This is the first time that reverse cross-border leases are being done in the country. Currently, cross-border leases done so far have been for acquisition of capital equipment, ships or aircraft. Both the Shipping Corporation of India (SCI) and the Indian Airlines (IA) have taken recourse to the mechanism.
Some of the private airlines have also used such mechanisms for operating aircraft.
The officials said that these lease arrangements were essentially financial leases worked out through the Export-Import (Exim) Bank of India.
The officials said that this mechanism was the best way of disposing surplus stock since the metre-gauge is still used in East Asian countries and almost the whole of Africa.
The officials predicted with the increasing gauge conversion will render more locomotives surplus which would be exported to these regions.
Although this was the first time that IR was entering into such a deal, the officials said that they had gained sufficient knowledge to export more such locomotives in regions where the metre-gauge was a standard.
In the process, IR also hoped to generate revenue to partially meet the funding requirements of the Project Unigauge.
However, these locomotives needed to be standardised to meet the requirements of the importing countries.
Currently, only the Golden Rock diesel loco workshop in Trichy, operated by the Southern Railway, is equipped to refurbish these classes of locomotives.
The locomotives are fitted with a dual braking system an air brake and vacuum brakes. Indian Railways locomotives use only vacuum brakes.
In the past, when guage conversions were undertaken, the locomotives were just scrapped.
Indian Railways had worked out the lease backed export option in view of the fact that these locomotives still have an effective working life of another 25 years.
Using a financing package had made the deal more effective since railway equipment purchases around the world are mostly done on a deferred payment basis or funded through external commercial borrowings.