Global recession hits Lalu’s pet projects

Lalu's plan to start work on greenfield locomotive factories in Bihar before model code of conduct for LS polls comes into force has run into an unforeseen wall - the global economic slowdown.

Written by Raghvendra Rao | New Delhi | Published: February 18, 2009 11:00:27 am

Railway Minister Lalu Prasad Yadav’s plan to start work on greenfield electric and diesel locomotive factories at Madhepura and Marhowra in home state Bihar before the model code of conduct for the Lok Sabha polls comes into force has run into an unforeseen wall – the global economic slowdown.

None of the three international players – Alstom (France),Bombardier (Germany) and Siemens (Germany) – who had been shortlisted after the technical bids for the Madhepura factory,have participated in the financial bid for the Rs 1,300 crore project.

For the Rs 1,400-crore Marhowra factory,only one out the two shortlisted players – GE – has put in the financial bid with the other player,EMD,not bidding.

Top officials admitted the poor response to the financial bid,which closed on February 16,was fallout of the economic recession. “The global financial situation appears to have taken its toll. These are projects which require substantial financial muscle and though some players have written to us that they were still keen to participate in the bids,the financial situation was not allowing them to do so,” a top ministry official told ‘The Indian Express’.

The Railways ministry is now wasting no time in preparing a fresh Cabinet note seeking clearance from the Cabinet Committee on Economic Affairs to allow it to set up the Madhepura project through the “departmental” route so that it can expedite things before the model code of conduct becomes effective.

On February 5,the Cabinet had cleared the Railways proposal to set up the factories as a joint venture between the ministry with equity of 26% and a leading international manufacturer. Now,the ministry will seek a go-ahead to start work on its own steam at Madhepura.

For the diesel loco factory at Marhowra which got one bidder,officials said that the “reasonableness of the tender will be evaluated on its merit and final decision will be taken”.

Lalu has not hidden his wish to start work on these projects as soon as possible. “Efforts are being made to start work on the diesel and electric locomotive factories at Marhowra and Madhepura in this month,” he stated in the Interim Rail Budget for 2009-10. Rail Bhavan officials admit they were under explicit instructions to fast track both the projects.

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