The Hindu Business Line : Japanese electric loco firms may benefit from $4.6 b loan

New Delhi, Oct. 28 Japanese firms in the electric locomotive manufacturing are likely to benefit from the recent $4.6 billion tied-loan sanctioned by Japanese Government for the dedicated freight corridor project.

The key Japanese players in the electric loco segment are Toshiba, Kawasaki and Hitachi.

Since the loan is under the Japan’s Special Terms for Economic Partnership (STEP) scheme, 30 per cent of the amount ($1.38 billion) will have to be used for Japanese goods and services.

Earlier, the Prime Minister, Dr Manmohan Singh, signed an agreement with his Japanese counterpart, Mr Taro Aso, for a 450-billion yen ($4.6 billion) loan to build the western freight corridor.

Japan has extended the loan for the Rewari-Vadodara section of the western freight corridor. This is the single largest overseas project financed by Japan.

Funds

The loan was extended after the Indian Railways decided to build the western freight corridor on electric traction. Initially, Railways had planned to build the western corridor on diesel traction as railways wanted to move double stack containers on the corridor.

While the exact details of where the 30 per cent of loan proceeds will be used are yet to be firmed up, a significant portion of the proceeds will accrue towards electric locomotive procurement.

Currently, the Indian Railways and Japanese Bank for International Cooperation are finalising the details. When contacted, Mr V.K. Kaul, Managing Director, Dedicated Freight Corridor Corporation of India Ltd, told Business Line, “We are at advanced stage of finalisation. A significant component of the loan would be used for procuring electric locos from Japanese companies.”

Declining to comment on any further specifics such as the number of locomotives to be procured, Mr Kaul said that the locomotive supplier will be selected through a competitive bid process among the Japanese manufacturers.

This procurement will be independent of the electric locomotive factory being set up by the Indian Railways at Madhepura (Bihar), where the private sector will have 74 per cent ownership, while Railways will have 26 per cent ownership.

RFQ

The companies that have technically qualified for the financial bidding stage for the Madhepura project are Alstom, Bombardier and Siemens. The project is in the form of a long-term procurement-cum-maintenance contract of 12,000 horsepower electric locomotives.

Incidentally, a Japanese consortium comprising Mitsubishi, Kawasaki and Toshiba had also put in its request for qualification application for this project, but did not qualify.