The Ministry of Railways, on November 9, 2015, issue a letter of award to GE (General Electric) for a $2.6-billion joint venture contract to supply and maintain 1,000 diesel locomotives.
In what is learnt to be GE’s biggest contract in India, the US-based conglomerate will invest $200 million to build a locomotive factory at Marhowra in Bihar as well as maintenance facilities at Bhatinda in Punjab and Gandhidham in Gujarat. The deal is also significant as involves India’s very first foreign direct investment in the railways sector. Another US-based locomotive giant Electro-Motive Diesel (EMD) was in the final race with GE.
According to plans, first announced in 2006-07, the factory will be set up by a joint venture in which the Indian Railways will hold 26 per cent stake. The private partner, GE Global Sourcing India in this case, will hold the remainder. The PPP contract and the joint venture will be formalized before construction work begins on the factory. On its part, the Indian Railways has already acquired 226 acres of land for the project and the factory is likely to be commissioned within three years, at a total cost of Rs.1,000 crore.
The plant would produce 4,500HP and 6,000HP diesel-electric freight locomotives, with Indian Railways committing to buying 100 locomotives per year for 10 years at a basic cost of Rs.14,656 crore for 1,000 locomotives. The supplier would maintain the locomotives until the 13th year of the contract, beyond which the Indian Railways would take over responsibility for maintenance.
These locomotives will be highly fuel efficient which will bring savings in fuel costs on Indian Railways. These locomotives will be equipped with latest technology like electronic fuel injection system, motor driven blowers and compressors, REMMLOT system, noise control to the latest standards. These hi-tech and environment friendly locomotives shall be compliant to UIC624 emission norms. Under PPP arrangement, there is no restriction on upgrade of technology by the company to bring further benefits to Indian Railways, a government release said.
Madhepura plant: The Centre, it may be recalled, has shortlisted three bidders—Alstom, Siemens and Bombardier—for setting up an electric locomotive unit at Madhepura in Bihar, on similar lines as the Marhowra plant. Unconfirmed reports indicate that Alstom has emerged as the lowest bidder. The contract envisages manufacturing 80 locomotives a year, including their maintenance for a period of 12 years.