To protect its interests,the Railways has significantly altered the terms of bidding for the mammoth locomotive projects at Madhepura and Marhaura in Bihar by asking the winning bidder to ensure technology transfer,reducing the lease period of land from 50 years to 30 years and lowering the scope of escalation in price of engines by increasing the fixed component in the price to 20 per cent from 15 per cent. Railway Minister Dinesh Trivedi will move a proposal to the Cabinet for the two projects separate diesel and electric locomotive units,first proposed by Lalu Prasad in 2007. According to government officials,the Railways Ministry is keen to limit the role of the bidders to only production of engines,while it wants to shoulder the maintenance works,something that it likely to be opposed by the loco suppliers. After repeated flip-flops over the manner in which the two projects should be executed,the Railways has finally decided to take the Public Private Partnership (PPP) route. The projects are unique and tricky to conceive since unlike roads and ports,in the case of locomotive units the Railways will be the only buyer and also the end-user. Lalu Prasads proposal to set up a diesel locomotive factory at Marhaura and an electric locomotive factory at Madhepura was cleared by the Union Cabinet in 2007. In the initial contract document,the Railways had proposed a JV with a private entity. But in 2009,it argued that the railways should execute them on its own. Again in 2010,the Railways reverted back to its original proposal of adopting the JV route. The projects have been pending for the last four years because of a deep division of opinion within the Railways on whether to build them on their own or through the PPP mode. Sources said the Railway Board had definite objections to the earlier model of PPP as it would have serious financial implications for the transport monolith. Even the finance ministry and Planning Commission categorically red-flagged certain clauses of the JV document saying it will have a telling effect on its finances At the behest of a section of officials within its Board,the railways set up an empowered committee comprising officials of the railway board,Planning Commission and finance ministry. The committee vetted some changes in the Request for Proposal document,but vetoed most clauses. The plan panel had opposed a high interest free advance of Rs 125 crore to be given to the bidders (GE,Alstom,Electro Motive Diesel,Bombardier,Siemens or others) for five locos.
