With the government facing multiple graft charges, the Prime Minister?s Office (PMO) and Planning Commission have stepped up vigil on Indian Railways? R2,000-crore diesel locomotive project at Marhaura in Bihar after information that the US-based Electro Motive Diesel (EMD) is trying to stymie the bidding process for the project.
The project, conceived four years ago, is stuck as the Railways is yet to complete the due diligence of the bidding documents. US giant GE is the the lowest bidder for the project followed by EMD. However, EMD now wants the current facility in Varanasi, for which it is the technology partner, to be expanded, instead of setting up of a new factory at Marhaura. EMD stands to lose its monopoly if the proposed plant is developed by GE.
Government sources told FE that officials from the PMO and the Planning Commission are monitoring the development. The trigger for such vigilance is several visits of senior executives of US-based Cohen Group to India to pitch for the expansion of the existing diesel locomotive factory at Varanasi. Cohen Group is understood to be acting as a lobbyist for EMD.
However, when contacted by FE, EMD Locomotive Technologies managing director Ajay Sinha denied any link with Cohen Group.
Cohen Group?s senior counsellor and ex-US under-secretary of state Nicholas Burns had met Planning Commission deputy chairman Montek Singh Ahluwalia early this year on behalf of EMD to lobby against the Marhaura plant and for expansion of Diesel Locomotive Works, the existing manufacturing unit at Varanasi. The group?s chairman and chief executive officer, William S Cohen, had also met senior government officials ? including Ahluwalia ? during his visit from January 12-15, senior government officials said, requesting anonymity.
In a letter written by Burns on February 3, which followed his meeting with Ahluwalia, the former US under-secretary recommended that the Railways should produce the maximum number of 5,500 horse power locomotives, which are being designed by the national transporter together with EMD, at Varanasi. Ahluwalia?s adviser Gajendra Haldea observed in a file noting, ?This seems part of the lobbying for retaining EMD?s monopoly over the technology and supply arrangement for production of diesel locomotives. EMD does not want the proposed competitive bidding to move ahead.?
The Railways, on the other hand, is postponing the financial bidding for the project in the name of carrying out due diligence. The financial bids should have been opened in December 2010, but the railway board still has to complete its due diligence. The new date for opening the bids from EMD and GE is July 29.
?We have been postponing the date and would do it again,? railway member (mechanical) Sanjiv Handa had told reporters in April. ?EMD does not want the Railways to move forward with the bidding process,? a senior official in Planning Commission said. Cohen Group and Indian railways did not respond to email queries.
Slow movement on the Marhaura plant is delaying other railway capacity-expansion projects. In addition to diesel locomotive plant at Marhaura, Railways has also lined up an electric locomotive plant at Madhepura in Bihar, a coach factory at Kanchrapara and a locomotive component unit at Dankuni in West Bengal. This has also led to shortlisted bidders for these projects threatening to pull out of the bidding process in case of prolonged delays.