Source: https://indianexpress.com/article/explained/rs-26000-cr-deal-with-siemens-for-high-horsepower-engines-railways-8387603/
Publisher: Indian Express
Taking a leaf out of some international models of manufacturing and procurement, Indian Railways has partnered with global mobility solutions major Siemens to produce 1,200 high horsepower electric locomotives at an overall cost of around Rs 26,000 crore.
While Railways has had such arrangements before, notably with other global majors like Alstom and General Electric to procure locomotives from factories in Bihar’s Madhepura and Marhowra respectively, the pact with Siemens is special because this model is new in India.
What is new?
For starters, the supplier, that is Siemens, has no capital expenditure liability in this contract. This is because all the locomotives will be manufactured in Railways’ newly built factory in Dahod, Gujarat. The manpower in the factory will also be supplied by Railways. Siemens will bring in material procurement, supervision and the technology to make the 9,000 horsepower engines.
In the Madhepura-Marhowra projects, the then innovative model for which was finalised as early as 2008 but the factory finally took off around 2015, Railways gave land for the factory whereas the technology partners did everything else, including setting up the factory and supplying the manpower. This was called Procurement cum Maintenance Agreement, whereas the current one with Siemens is called Manufacture cum Maintenance Agreement. The contract is for 35 years, including maintenance, which is pretty much the entire lifecycle of the engines.
There is also the added advantage that this, like in Madhepura-Marhowrah, is an “assured offtake” model, wherein, all the 1,200 engines are pre-bought by the client, so there is zero risk.
Globally, another transportation solutions major Bombardier has a somewhat similar model called FlexCare, for engagement with clients on long-term maintenance of the vehicles it makes.
When do these engines start rolling out?
The first engine will take two years to come out because setting up the factory will take that much time. The network operator also needs the appetite for absorbing the engines, which is based on the currency of its existing stock. Considering that, the roll-out has been staggered over 11 years. Starting with around five a year, the factory will be churning out 160 engines per year in the final couple of years.
Additionally, Siemens will also carry out maintenance of these engines at depots in Visakhapatnam, Raipur, Kharagpur, Pune using Railways manpower.
Siemens will also ensure 95 per cent availability and 1,50,000 km of trouble-free operation of the locomotives before any maloperation can take place, as the guaranteed Key Performance Indicators under the contract.
