In contravention of the Central Vigilance Commission norms, the Indian Railways is in talks with Bharat Earth Movers (BEML) on allowing the latter to set up a R1,300-crore coach manufacturing factory at Palakkad, Kerala, on a nomination basis.
The move comes close on the heels of it offering the Kanchrapara coach factory to Bharat Heavy Electricals (Bhel) along the same model.
The move violates the CVC norms on public procurement and runs contrary to the railways? previous strategy of developing the factory through public-private partnership. CVC guidelines on procurement of equipment support competitive tendering. Four years ago, the wheels factory was proposed to be taken up in partnership with the private sector.
?We are discussing the possibility of awarding the contract to BEML. However, nothing has been decided as of now,? Railway Board chairman Vinay Mittal told FE. Emails sent to the Kerala government and the BEML remained unanswered even after a week. The factory is one of the many proposed by railways as it goes about increasing capacity through projects costing R14 lakh crore by year 2020. Railways has also proposed setting up of two locomotive units in Bihar, an engine component unit and a coach factory in Bengal.
As reported by FE on September 19, 2011, railways had sought Bhel?s views on offering a R26,000-crore contract to set up a coach production unit at Kanchrapara, West Bengal, on nomination. This was done even as eight shortlisted international engineering firms, including GE, Bombardier, Siemens and Alstom, waited to submit financial bids for the project.
?Bhel has not replied to the proposal yet,? said Mittal. On being asked about violation of the CVC norms, Mittal said: ?I don’t know of any norms that are being violated by the proposal.?
BEML already has a factory at Palakkad for manufacturing defence equipment. Railways feels that the coach production unit could be set up as an extension of the overall facility. ?The coach factory would be a forward integration for BEML,? the railway board chairman said.
Railways is also thinking of making Kerala government a partner in the project in lieu of the 426-acre land to be allotted by the state. The state is being involved as a partner as railways financial position has weakened and it could not pay for the land.