CAG questions need for GE’s new diesel locomotive plant in Bihar
The mega diesel engine making project in Marhowra, Bihar, that the Railways had awarded to GE Global Sourcing India in 2015, is under the scanner.
The Comptroller and Auditor General (CAG) has questioned the need to set up the plant at a time when the Railways is stopping the production of such engines.
GE’s global restructuring
The observation comes at a a time when GE is undergoing a global restructuring. The $3.9-billion GE Transportation has signed an agreement with another US-based rail equipment producer, the $3.9-billion Wabtec Corporation, to form a large rail supplier. It is not clear yet how and if GE’s global plans will impact its India operations. As things stand, the Marhowra factory may end up being India’s only diesel engine producing facility in a few years.
The Railways has already stopped producing diesel engines at DMW, Patiala, and plans to stop producing them at Varanasi from FY20. Moreover, the CAG noted the trend of the Railways not using about a fourth of its fleet of diesel engines between FY08 and FY16.
In this context, the CAG has called for a review of the project. It has also asked why the Railways’ requirement projections were not re-assessed between 2006-07 (when the project was announced) and 2015 (when the contract was awarded).
The demand for diesel engines should have been reassessed, particularly in the backdrop of the Railways increasing its pace of electrification, it said. In fact, in September 2017, the Railways decided to develop a 100 per cent broadgauge electrified network over two years due to lower electricity and environmental costs.
The Railways will be paying GE ₹14,656 crore for 1,000 engines apart from a ₹2,228-crore maintenance fee. Moreover, the Railways had spent ₹242.08 crore till September 2017 to buy land to set up rail and road connectivity, and for equity, in the Marhowra factory. “The liability of Indian Railways for the project is at ₹17,126 crore,” according to CAG.
Where diesel helps
Ironically, the CAG has also pointed out several stretches where the Railways continues to run diesel engines despite having electrified tracks. This is because of the nearby tracks not being electrified, absence of matching of diesel and electric traction at interchange points and crew unavailability, among others. Also, the Railways uses diesel engines to run rescue trains during floods.
The CAG had raised these issues with the Railways in January, but it had not received a response till February-end.
Meanwhile, GE Transportation had told BusinessLine earlier that its contract with the government had clauses for change in demand and change of ownership of company.
Also, GE Transportation’s two engines handed over to the Railways earlier have been tested on tracks here. The Roza Maintenance Facility in Uttar Pradesh is ready for operation and the Marhowra facility in Bihar is ready to start running in end-2018.
Almost 200 Railways pilots have been trained to operate these fuel-efficient and emission-friendly engines, said GE in a statement, adding it has also readied another 45 engines, which are expected hit the country soon.