Global engineering giants could pull out of rly projects

Written by Praveen Kumar Singh | Praveen Kumar Singh | New Delhi | Updated: Jan 31 2011, 07:33am hrs
Engineering giants Bombardier, Siemens and Alstom have indicated that they would pull out of the bidding process of key public-private partnership projects of Indian Railways. These companies are among the shortlisted bidders for a locomotive factory at Madhepura in Bihar, an engine-component unit at Dankuni and a coach plant at Kanchrapara in West Bengal. The projects are on the priority list of the railways but the financial bidding for the same has been postponed repeatedly, upsetting the plans of these engineering majors who have similar projects in other countries as well.

The firms have told the railways that they have forgone similar opportunities in other countries as significant resources have been committed for these projects. In strongly worded letters earlier this month, copy of which are with FE, the multinational behemoths have warned the railways not to postpone the financial bidding again.

In case the ministry of railways plans to postpone the date, we also request you to advise us a confirmed date of the bid submission such that we could demobilise our already-committed resources accordingly for other activities and projects, Alstoms director (business development) Mangal Dev said.

In his letter to Railway Board chairman Vivek Sahai, Bombardier Transportations president Andre Navarri said the repeated postponement in financial bidding would dampen the interest of bidders and will be detrimental for the projects competitiveness. He added that repeated postponements, as seen in the recent past of the current projects, may lead to confusion on the understanding of the priorities of Indian Railways.

Siemens also asked railways to stick to the current deadlines of calling financial bids because the resources cannot be left unutilised for long as it has taken a time-bound approval from investors. When contacted, a railways spokesman said, Issues raised by the bidders are being handled on file and necessary decisions taken to take the process forward are being communicated to them through the nodal directorate of Railway Board".

The projects are important for Indian railways as the entity does not have the wherewithal of investing nearly Rs 3,000 crore required to set up these units, while carrying out its routine of facilitating passenger transportation at highly subsidised rates. The railways also have to provide equity for locomotive plant at Marhaura in Bihar and in railway minister Mamata Banerjee's words, for socially desirable projects. But if the private firms decide to not submit financial bids, railways might not have any options but to invest from its depleting reserves.

As per official data, there has been no addition to railway development fund and capital fund in the last two years. The 2010-11 Budget Document shows that Indian Railways had a development fund of Rs 432 crore and capital fund of Rs 3,114 crore at the beginning of the financial year. It is expected to withdraw a further Rs 2,853 crore from the capital fund in 2010-11 to lay railway lines and invest in its existing manufacturing units. At the end of the year, it will be left with only Rs 262-crore capital fund.

Financial bidding for the Madhepura project, which was planned three years ago, is being postponed since October 2010. The railways have scheduled the bidding for February 4, 2011 but it is understood that the same is likely to be postponed further to March. The Dankuni project is also facing delays with the bidding deferred from January 12, 2011 to March 7. For Kanchrapara, railways had shortlisted bidders in August last year, but no further movement has taken place.