L.O.A Issued To M/S Alstom Manufacturing India Ltd, for Setting up Electric Locomotive Factory by Indian Railways

Indian Railways has issued the Letter of Award (L.O.A.) for setting up of Electric Locomotive Factory (ELF) at Madhepura in Bihar to a France-based company M/s Alstom Manufacturing India Limited.  This new factory will supply 800 high horse power (12000 hp) electric locomotive over a period of 11 years.

The project would bring in an investment of Rs 1300 crore for setting of the factory and also the maintenance facilities. It would also entail procurement of 800 High horse Power (12000 HP) locomotives costing about Rs. 19,000 crore (exclusive of Taxes and Duties). 

Although the tenders do not come to the Railway Minister, the mantra of decentralization, deregulation and delegation of powers to the cutting edge functionaries initiated by Minister of Railways Shri Suresh Prabhakar Prabhu in a big way helped expedite the awarding of LOA.

A joint venture company between Ministry of Railways and M/s Alstom Manufacturing India Limited will now be incorporated and agreement between the two will be signed within the next 30 days. This JV shall construct and run ELF Madhepura. Ministry of Railway will hold 26 per cent equity in JV Company subject to a maximum of Rs.100 crore.  The proto-type locomotives are to be delivered in the coming two years and the factory is to be set up within a period of three years from signing of the Agreement. 

The project requires only five electric locomotives to be imported. The balance 795   locomotives are to be manufactured in India. The contract provides suitable economic drivers which would ensure complete indigenization of the manufacturing which in turn will lead to substantial development of ancillary manufacturing units and indigenization of the locomotives making it a true ‘Make in India’ proposition. The project would also lead to development of the region where the factory would be set up and also those where the maintenance facilities would be set up. In sum, the project would bring in substantial development in these areas and also lead to generation of direct and indirect employment.

The project would also enable Indian Railways to have a fleet of locomotives equipped with state of the art propulsion technology. These High Horse Power (12000 HP) locomotives would be a quantum leap over the existing 6000 HP locomotives used for freight operations. These locomotives are planned for use in the Eastern DFC and also for Pan India operations for hauling freight trains of 6000 Tonnes at 100 kmph and improve the average speed of such trains to around 50-60 kmph over the existing 25-30 kmph. The quantum jump in the operating parameters would lead to substantial increase in the throughput and also enhance line capacity. These locomotives, equipped with state of art IGBT, based propulsion technology, would lead to considerable savings in energy consumption due to use of regenerative braking.

Earlier Indian Railways had issued L.O.A. for setting up of Diesel Locomotive Factor (DLF)  to M/s GE Global Sourcing India Pvt. Ltd. for manufacturing and supply of 1000 Diesel locos at about Rs.14,656 crores in a period of ten years with establishment of factory costing about Rs.1000 crores.

These two big ticket projects at Marhowra and Madhepura will usher in inflow of substantial FDI in Indian rail sector.

The entire bid process has been conducted in a fair, transparent and competitive manner which has drawn international attention. The simplified bidding process adopted for a complex project of this magnitude has also been appreciated by all stakeholders. The efforts made by Ministry of Railways in this direction has received wide appreciation.

BACKGROUND INFORMATION : -

The Cabinet had approved setting up of Electric Locomotive Factory in Madhepura (Bihar) in Feb.’ 2007. The factory is to be set up through Joint Venture (JV) Route with a 26% equity of the Ministry of Railways in the JV.

The Joint Venture Partner was to be selected through an international competitive bidding process. Following which the selected partner was to set up a manufacturing facility at Madhepura (Bihar) for manufacturing electric locomotives. Ministry of Railways would procure 800  High horse Power (12000 HP) electric locomotives over a period of eleven years from the aforesaid facility. The Joint Venture Company would also be required to undertake maintenance of 500 electric locomotives at two locations for a specified period.

For fulfillment of the above objective, Ministry of Railways decided to conduct a two stage bidding process comprising of Request For Qualification (RFQ) for short-listing of bidders and Request For Proposal (RFP) for obtaining financial bid for selection of a suitable JV partner through International Competitive Bidding. The standard RFQ and the RFP documents of the Ministry of Finance were used in the process. The Cabinet had approved the bidding documents comprising of Request For Proposal and the Procurement-cum-Maintenance Agreement (PCMA) in Jan.’ 2014.

The Request For Qualification for the present bid was initiated in May, 2013 and the process concluded by way of short-listing of bidders in May, 2014. Following bidders were shortlisted for the project:-

ELF, Madhepura Poject.

(a)                Alstom Manufacturing India Ltd.

(b)                Bombardier Transportation India Ltd. 

(c)                GE Global Sourcing Ltd.

(d)                Siemens Locomotives, Germany.

            The RFP documents were issued to the short-listed bidders inviting financial bids on Feb 27, 2015. Two pre-bid meetings were held during the process and subsequently, the financial bids were received on 31^st Aug., 2015.

After detailed evaluation of the bids, Ministry of Railways had declared Alstom Manufacturing India Limited as the selected bidder

The entire bid process has been conducted in a fair, transparent and competitive manner which has drawn international attention. The simplified bidding process adopted for a complex project of this magnitude has also been appreciated by all stakeholders. The efforts made by Ministry of Railways in this direction has received wide appreciation.