Indian Railways plans to scrap the upcoming diesel locomotive manufacturing unit in Marhaura, Bihar, but it won’t be easy.
The national carrier may require cabinet approval to do so and might need to pay damages to the company involved—US giant General Electric Co. (GE).
A senior railway ministry official said on condition of anonymity that “anything that has been approved by the Cabinet can be modified or terminated only after the proposal is taken back to the Cabinet committee”. This person added that in the case of a “big project such as this the company can also seek payment.”
He added that the bigger problem is the timing of the decision as the company plans to deliver the first locomotive to the railways by January-February 2018 and the first imported locomotive is about to reach Indian shores by the first week of October.
Railway board chairman Ashwani Lohani said: “We are still analyzing the project and no decision has been taken yet.”
The situation arose after the new railway minister Piyush Goyal, during a meeting on 7 September, asked the national carrier to review the GE project as Indian Railways plans to go for complete electrification by 2022. However, neither the minister nor railway ministry officials are ready to comment on the move.
In January 2014, when the Congress-led United Progressive Alliance (UPA) was in power, the Cabinet gave its approval for setting up an electric locomotive factory at Madhepura, Bihar and a diesel locomotive factory at Marhowra at an estimated cost of Rs1,293.57 crore and Rs2,052.58 crore, respectively, with limited equity contribution by the ministry of railways. As per plans, over a 10-year period, the factories will provide Indian Railways with 800 electric locomotives of 12,000 horsepower (hp) each and a mix of 1,000 diesel locomotives of 4,500 and 6,000 hp with high level performance guarantees.
GE, in a statement on Tuesday, said if the “Ministry of Railways moves forward with changes to the joint venture between Indian Railways and GE, they will undermine one of the most promising infrastructure projects in the country and put future foreign investment at risk. An alteration of this contract will have serious impact on job creation and skills development and cause the government to incur substantial costs. This will also undermine the government’s signature ‘Make in India’ initiative.”
The company said the project is on track and the first locomotive has been shipped from the US. “The construction of our factory in Marhaura, Bihar and maintenance shed in Roza, Uttar Pradesh are well underway and expected to be completed on time. We expect the partnership to move forward and the company continues to fully execute towards the plan.”