New Delhi: Railways minister Piyush Goyal on Thursday said work on the Marhaura diesel locomotive project in Bihar is on track and that the government would abide by its contract with General Electric Co. (GE).
His comments came after the company issued a strongly worded statement on Monday saying any decision to scrap the project would have a “serious impact on job creation and skills development and cause the government to incur substantial costs”.
The statement also said the first of the locomotives had been shipped from the US and were scheduled to arrive in India on 10 October.
That statement, covered widely in the media, seems to have prompted the press conference addressed by Goyal on Thursday.
“The Marhaura factory is being set up and it’s on track. I don’t see any change happening. In fact, their (GE’s) South Asia head and India head had met me about five-six days back and they asked Ghanshyam Singh (railway board member) to send people for inspection,” said Goyal.
Supplementing the railway minister’s statement, minister of state for railways Manoj Sinha said, “It’s a cabinet decision and we are committed to it.”
Both ministers said that a diesel locomotive manufacturing facility can, if required, be upgraded to make electric locomotives. Goyal said that if Indian Railways’ requirements change, GE will be informed about it.
Sinha added that Indian Railways’ Diesel Locomotive Works (DLW) at Varanasi makes both diesel and electric locomotives. Although the ministers claimed that Indian Railways has resolved the issue with GE, there are still some unanswered questions.
For instance, what happens to the Varanasi DLW? And what of the government’s plan to take Indian Railways completely electric by 2022? What happens to the diesel locomotives then?
The Marhaura diesel locomotive factory in Bihar was approved in 2014 when the Congress-led United Progressive Alliance (UPA) was in power but was finally signed off on by the National Democratic Alliance government when Suresh Prabhu was the railways minister. The cabinet decision said that a diesel factory would be set up at the cost of Rs2,052.58 crore and as per the plans, Indian Railways would buy 1,000 diesel locomotives from it over 10 years. The railways minister also announced that the national carrier had no plans to raise passenger fares and would focus on increasing train speeds.
“We propose to increase speed of around 700 trains from 1 November,” said Goyal.
A GE spokesperson declined to comment in response to phone calls and SMS queries.
“It’s a good decision. India has a very poor track record on enforcement of contracts and in case the present contract would have been terminated, it would have brought back memories of Vodafone and others,” said Jaijit Bhattacharya, partner and head, economic, regulatory and policy advisory at KPMG in India.
The Vodafone reference is to the government retrospectively amending tax laws to force the company to pay tax for a 2007 deal in which the British multinational telco bought the Indian telecom business of Hutchison Telecom.
Bhattacharya added that once you enter the contract, there is no rationale to back-track and the government must pay heavy damages for its termination.