Railway’s locomotive dilemma
The recent closing of a Transport Ministry tender for 15 rail locomotives has brought back the ghosts of the last such tender.
Out of 10 French locomotives imported in 2000 at a cost of Rs 1.9 billion, seven of them were non functional and had to be scrapped due to various electrical and mechanical problems stemming from the fact that they were not suited to the Sri Lankan railway system.
Even as far back as 1979, the Ceylon Government Railway purchased 16 locomotives from Hitachi in Japan, out of which all of them have been scrapped, bar four, which had their engines replaced with those from another supplier.
Sri Lanka has however, in the past, imported railway locomotives from reliable suppliers in Germany, the UK, North America, and even once from India, over the past 60 years without encountering any catastrophe of such magnitude.
New bidders
In the most recent tender for 15 locomotives, closed on May 9, there was a relatively new mix of bidders and great price differences between the bids which ranged between US$ 20 million and US$ 60 million.
Out of the seven accepted bids, four were from Chinese companies, one from India and two from the USA. The American bids were the most expensive totalling more than double the price of the Chinese offers, costing US$ 43.4 million and US$ 63 million respectively for 15 locomotives.
Of the four Chinese bidders, one, CSR Qishuyan Locomotive Company, had not provided a bid bond, and is slated to be rejected on that basis. The other three offers were quoted in Euros and range between 12.8 million and 14.8 million Euros.
Railway officials are apprehensive about the possibility of the tender’s evaluation committee being fooled by a lower bidder into buying a poor quality engine that might not last more than a few years. One long time rail engineer pointed to the experience had by Pakistan at the hands of one of China’s largest locomotive manufacturers, Dalian Locomotive and Rolling Stock Works.
Pakistan experience
Pakistan’s Daily Times reported in March 2005 that the country’s Parliamentary Public Accounts Committee (PAC) had investigated a US $98 million acquisition of rail locomotives from China’s Dalian, in which it was found that the undercarriages of the locomotives were defective.
“Cracks were noticed on the welding seams on the under frames” of some of the locomotives,” the Daily Times quoted the PAC as being told. The then Pakistani Railways Minister, Miam Shamim Haider in a statement to media said that the cracking undercarriages were a “major problem” and that “the Chinese suppliers have been advised to stop the delivery or the balance locomotives until the issue is resolved to the entire satisfaction of Pakistan Railways.”
Other countries known to be using Chinese locomotives are Turkmenistan and Kazakhstan in the former Soviet Union, Sudan and Vietnam. The lack of access to media in these countries makes it difficult to uncover more about the experiences they have had with the Chinese engines.
The three Chinese companies which provided bid bonds for the recent Sri Lankan tender are listed as Zhengzhou Railcar Propulsion Engineering R&D Centre, China National Import and Export Corporation and the Loric Import and Export Corporation.
Out of these companies, Zhenghou was established in September 2002 according to its website, and thus does not fit into one of the tender criteria of having 15 years of experience in the railway locomotive manufacturing business.
Chinese expertise
The National Import and Export Corporation’s website says that the company has, “in the recent decade” exported “nearly US$ 300 million” worth of “railcars, freight trains, container flat trail cars, cement tank cars, steam locomotives” and maintenance machinery. It does not indicate any expertise in the supply of diesel electric locomotives as required in the tender.
The Sunday Leader was unable to unearth any information about the experience of the third bonded Chinese bidder, Loric Import and Export Corporation, which was incidentally the lowest of all the bids received, with the cost of spare parts included.
Another worrying factor about the Chinese bids in general, is the fact that the Chinese government has signed a contract with America’s Electro-Motive Diesel (EMD) for the supply of 300 diesel electric locomotives. This move indicates that even the Chinese government was wary of the technical expertise of its own local manufacturers, even though these companies are eager about exporting their products.
The Indian bidder, government owned RITES was in the middle of the pack in terms of pricing, being half the price (US$ 33.3 million) of the most expensive offer, from American GMD. RITES is however, a project consultancy firm in principle, and its publicised railway services consist mainly of designing for wagons and other rail equipment as well as assistance for rail road repairs.
The engine being offered by RITES, is of a model called ‘ALCO,’ manufactured by the North American ‘ALCO Bombadier’ company, that has since split up, and thus the ALCO engines are no longer in production. Sri Lanka Railways already uses some ALCO engines, whose design is considered solid by railway officials in principal.
However SLR engineers lament at the difficulty in obtaining service training and spare parts for maintaining the now obsolete engine. It is unknown how the Indians have addressed this problem in their tender submission.
Workhorses
Most railway officials we spoke to indicated a clear bias towards the most expensive offer from America’s EMD, despite it costing twice as much as the Indian offer, and up to three times as much as some of the Chinese offers.
Several articles have already appeared in local newspapers quoting railway engineers and former officials in strong advocacy of favouring the pricey American bid. Their main argument is centred around the fact that all the engines supplied by EMD in the past, including a batch of 14 supplied in 1954, are still operational and form the “mainstay” of the Sri Lankan railway fleet today.
The one EMD engine that is non-operational, the company’s advocates in the Railway Department boast, is one that was destroyed in an LTTE bomb blast. However loyal the employees of the Railway Department may be to the American rail giant, it is unlikely that on the occasions that EMD engines were purchased in the past, that there were viable bids that so severely beat the company on price.
Whether the government can afford to spend over US$ 60 million on just 15 rail engines, given the current state of the national coffers, must also be called into question. A former SLR engineer took the view that “with EMD, worldwide their engines do not fail, so there will be a saving in the long run.”
Fuel factor
However a person who served on a Technical Evaluation Committee for a previous rail tender said that the current situation requires “a close look at the priorities and what the country can afford.” He said that whatever SLR’s faith in a particular contractor, the TEC must use all the information at its disposal to ascertain whether any of the cheaper bids would be able to match EMD on reliability.
“It is up to them to scrutinise all the bids carefully and make the right choice. The problem is that they can’t be held accountable if these things break down after 10 years, and the problem will be for the Railway Department,” he said.
Apart from total price, reliability and spare parts, one official in the Railway Department told The Sunday Leader that almost Rs 3 billion in diesel fuel was consumed by the trains in 2007. “With the price of fuel going up so much now, we have to also look at this as a factor. Even if a bidder can deliver a 10% reduction in fuel consumption from the engines we use now, that would make the trains a lot more profitable as this is the main cost incurred,” he proposed.
With all the information required to take the most prudent decision - balancing the chequebook of today with the risk of problems in later years - already before the railway tender’s Technical Evaluation Committee, we can only offer them an old Chinese adage: “Good things no cheap, cheap things no good.”
By Ranjith Jayasundera
Source: The Sunday Leader
Tags: ceylon, evaluation committee, locomotive company, locomotive manufacturers, mechanical problems, poor quality, price differences, quality engine, rail engineer, rail locomotives, railway locomotives, railway officials, railway system, rolling stock, sri lankan, transport ministry
July 16th, 2008 at 5:48 pm
Sorry to hear the dilema about your Railways.RITES is any day a better organization to be relied upon. I am not sure of RITES fielding the ALCO locos. May be RITES has adressed the issue correctly. ALCO locomotives were part of erstwhile Metergauge fleet(did a wonderful job).
Costwise reliability wise RITES is better