In order to tackle the shortage of locomotives, Pakistan Railways (PR) is set to purchase 150 diesel-electric locomotives from America’s General Electric Company, regarded as a very strong company, producing locomotives, as a ‘pre-tender’ deal has already been reached. A source told Pakistan Today that all the matters between Pakistan Railways and the General Electric (GE) have been finalised even before floating the tender and the first consignment of locomotives would most likely arrive by September this year.
“The deal has been settled and only formalities have to be unfolded. The locomotives would cost Pakistan around Rs43 billion as each locomotive would have a price tag of around Rs280 million,” added the source. The source said that Pakistan and the GE have agreed that US Export and Import Bank would provide loan to Pakistan under which these locomotives would be purchased. The source said that Pakistan, however, would have to submit 10 percent down-payment to the GE under the deal.
In May 2010, Pakistan Railways had launched an international tender for procurement of 150 American diesel-electric locomotives but the tender could not be opened due to court proceedings. The source said keeping in view the country’s terrible experience of using Chinese made locomotives, the railways minister wished to secure GE locomotives and after hectic efforts, he had got a deal finalised with GE under which locomotives will be arriving soon.
When contacted, PR General Manager (GM) Operations Saeed Akhtar confirmed to Pakistan Today that the Railways was going to reissue a tender to purchase 150 locomotives in the near future but the specifics were yet to be evolved. When asked whether the Pakistan Railways had finalised any deal with the GE, Saeed Akhtar said the tender would be a fresh tender and the previous tender had lapsed. He said it would be an open and fresh tender and nothing was final yet.
Most recently, the US congress was told that Pakistan was buying 150 locomotives from the General Electric Company, although a similar offer from China was 30 to 50 per cent cheaper. According to a transcript released by the US congress, the issue was raised at a hearing the House Subcommittee on International Monetary Policy and Trade when Congressman Robert Dold, an Illinois Republican, asked a GE representative how this deal had been arranged.
Karan Bhatia, vice president and senior counsel, General Electric told the congressional panel that after they had submitted their bid with Pakistan’s Railways Ministry, a Chinese company stepped in and offered ‘extremely aggressive concessionary financing’ to Pakistan. The government has informed GE, “If you can’t match that, you’re not going to be selected,” he said. So the company went to the US Export and Import Bank, which agreed to match the Chinese offer and the GE was selected.
Bhatia said this was not only an opportunity for his company but “It was also an opportunity to strengthen Pakistan’s economy, allow goods and cargo to flow more effectively, thereby strengthening the economy and hopefully addressing some of the other challenges that exist in that country”. But he explained that due to some ‘legal processes’ and the tender would be re-issued.
PR has 5,000 wagons in ready conditions, which need 400 locomotives for meeting 100 per cent deficit in its budget. The railways has a total of 520 locomotives but only 146 are on track while the rest are out of order. Similarly, 70 per cent carriages are out of service. It is also noted that the organisation immediately needs 225 locomotives to replace those which were already overstretched.
The department is demanding a bailout package of Rs11.5 billion to meet its need. But last year, railways budget was reduced to Rs7.3 billion from Rs13.6 billion after cut in development allocations. Pakistan Railways has also demanded Rs5.2 billion for repair of 100 locomotives held up for want of spare parts besides rehabilitation of passenger coaches.
On Dec 31, 2008, Pakistan Railways signed a separate contract with China’s Dongfang Electric Corporation for buying 75 diesel-electric locomotives. The Railways is considering another proposal to purchase 50 used General Motors 3,000 horse power locomotives from South Korea. Railways has also signed a contract agreement of $134.45 million with China’s Machinery Import and Corporation for procuring 202 passenger coaches.
