Projects in 2 Lalu constituencies to be put on fast track

Times of India, Feb 5, 2009

NEW DELHI: Anxious to appease his constituents before the model code of conduct forbidding sops kicks in, railway minister Lalu Prasad has got the
government to agree to a change in the mode of execution of projects to manufacture electric and diesel locomotives — putting two factories in home state Bihar on the fast track.

The Union Cabinet on Thursday is scheduled to take up a proposal to switch the character of the projects to manufacture electric and diesel from public private partnership (PPP) schemes to joint ventures involving the railway ministry.

The change is designed to help speed up the projects coming up, at an estimated cost of Rs 2,800 crore, in Chhapra and Madhepura. Lalu contested and won from both constituencies in 2004 and the decision to locate two high-value projects, announced in 2007, were seen as a thanksgiving gesture to the electorate.

A greenfield high horsepower electric locomotive factory will be set up at Madhepura, while Marhowra in Chhapra, from where the RJD strongman in all probability will seek re-election, will be the site of a diesel locomotive plant.

Top government sources pointed out that the railway ministry has framed a new proposal suggesting that the project will be a joint venture between Indian Railways and a private firm, and not a public-private partnership (PPP) project as originally conceived.

The joint venture option, which is likely to have majority stake of railways, will cut the project's time table as it will require just a clearance from Lalu's ministry. In contrast, the PPP mode will have to be vetted from an inter-ministerial committee, including Planning Commission and finance ministry consuming more time.

Lalu has made few bones of his uneasiness with the objections raised and clarifications sought by the plan panel and the finance ministry as they check proposals for their financial viability.

On Thursday, the railway minister lodged a strong protest against the ``obstructionist'' ways of the plan panel and bureaucracy in the meeting he had with UPA chairperson Sonia Gandhi.

The move comes against the backdrop of difficulties railway ministry had faced in putting projects, cleared in 2007, on the implementation track. The approaching polls, clearly, added to the sense of urgency.

Sources pointed out that according to the new proposal, to be discussed by Cabinet, the transaction with the private company will be a procurement and a maintenance contract executed between the ministry and the joint venture.

The railway ministry has said the contract for procurement will last for eight years and the locomotives will have to be delivered by the supplier over eight years.

The contract for procurement of locomotives will also include their maintenance for up to 20 years. Every year, the joint venture will be expected to deliver a specific number of locomotives, said an official.