The rail ministry today announced it has awarded the much-awaited Rs 14,656 crore contract for setting up a diesel locomotive project in Bihar to GE, the US-based multinational transport giant. The project, India's first big-ticket Foreign Direct Investment (FDI) in railways, will come up at Marhowra in Saran district in Bihar.
"Indian Railways has taken a giant leap forward in Make in India by issuing the Letter of Award (LoA) for setting up Diesel Locomotive Factory at Marhowra and procurement and maintenance of mainline Diesel electric locomotives to GE Global Sourcing India today," Railway Board's Member-Mechanical Hemant Kumar said.
He added the award was made possible by minister Suresh Prabhu's drive for decentralisation of powers accord approval. Kumar also informed the ministry will on Tuesday announce the award for the other major electric loco project at madhepura in Bihar. Sources said French firm Alstom has been shortlisted for that project. With the government allowing 100 per cent FDI in Railways, the setting up of the two locomotive plants in joint venture mode is crucial for the public transporter in order to boost its infrastructure.
Apart from GE, three other companies -- including US-based Electromotive Diesel (EMD) and two Chinese firms -- were in the race to bag the Marhowra project. The Chinese firms were disqualified by the rail ministry and RFP was issued to the two short-listed bidders on 11 March this year. The final bid was opened on 1 September.
The project was originally announced in 2006-07 for selection of a Joint Venture partner through international competitive bidding for manufacturing and supply of modern Diesel locos of 4,500 Horse Power and 6,000 Horse Power to railways.
Now a JV company will be incorporated between the rail ministry and GE which will construct and run the Marhowra factory.
"The rail ministry will hold 26 per cent equity in the JV company subject to a maximum of Rs 100 crore. Railways have completed the acquisition of 226 acres of land for this project. The factory is expected to be established within the next three years at a cost of Rs 1,000 crore," Kumar said.
The company will work on an assured off-take model of 100 locos per annum for ten years. The basis cost of 1,000 freight locos will be around Rs 14,656 crore. The company will also maintain the locomotives for 13 years after which Indian Railways will take over. The locomotives from the Marhowra factory will also support the upcoming Dedicated Freight Corridors on the Delhi-Mumbai and Delhi-Kolkata routes.
The ministry said the project will lead to setting up of support ancillary industries in Bihar, promote fuel efficiency through latest technology and push indigenisation of production within two to three years of commencing operations. As part of the pact, GE will import 100 locos and manufacture the rest 900 in the Marhowra factory.