Slow progress in the Madhepura locomotive plant in Bihar is proving to be a hurdle in the progress of other railway projects that are expected to bring in private investments and help the national transporter reach closer to targets set in its Vision 2020 document. Two other railways projects ? the coach factory at Kanchrapara, West Bengal, and the diesel locomotive plant at Marhaura, Bihar ? have become latest victims of the new financing model devised by the government that has already created problems for the Madhepura project.
The railway projects are important for attracting private investment and delivering the goals of enhancing rolling stock capacity. Under the vision document, railways plans to procure 5,334 diesel locomotives, 4,281 electric locomotives and 50,880 passenger coaches in the next 10 years.
The two factories, which cost more than Rs 3,000 crore together, are modeled on the electric locomotive plant at Madhepura, Bihar, and the railway ministry feels that it will move smoothly towards awarding the former projects as and when a company is selected to develop the latter.
?We are facing problems in awarding the Madhepura plant. We had set January 10, 2011, as the date to open financial bids for this project, but there are internal hiccups due to which the bids will be called in February. Once we resolve these problems, other projects will move faster,? a senior official in railway ministry told FE asking not to be named.
The Rs 2,000-crore Madhepura plant is facing delays due to a logjam between Planning Commission and finance ministry over a new financing norm. The finance ministry wants that only 1% of the project cost should be given to the developer as interest-bearing advance. But Planning Commission thinks that such a model will make the project unviable and at least 20% advance money should be given zero interest. The financial bids have been postponed twice due to this logjam.
On the top of it, the railway ministry is itself trying to resolve internal differences over the lease period of land for the project. Member (engineering) AP Mishra is opposing the proposed lease period of 50 years and has suggested to reduce it to 10 years to make it co-terminus with the procurement contract period. Railways has shortlisted Bombardier, Siemens, GE and Alstom as bidders qualified to submit financial bids. In case of Marhaura plant, GE and Electro Motive Diesel have been shortlisted for financial bidding, but the project has not moved forward. For Kanchrapara coach factory, eight bidders have been pre-qualified.
?We have to get cabinet approval for the request for proposal (RfP) document. The financial bids would be invited in March 2011,? another railway official said.