Revising its earlier decisions, the Centre on Monday allowed the establishment of an ad hoc rail tariff authority and two electric and diesel locomotive factories in Bihar as joint ventures.

The Cabinet gave the green light for the setting up of the authority as an advisory body, pending amendment to the Railway Act, 1989.

The decision to have an ad hoc arrangement through a government resolution was taken because establishing it through an executive order, as had been desired by the Cabinet, was not feasible given that under the Railway Act only the Railway Board can decide on the prices of rail services. The authority, with a chairman and four members, will recommend the pricing of the passenger and cargo segments.

The Cabinet approved the setting up of an electric locomotive factory at Madhepura and a diesel locomotive factory at Marhoura at an estimated cost of Rs.1,293.57 crore and Rs. 2,052.58 crore.

These units will have limited equity contribution from the Railway Ministry, and the Ministry will choose a reputed international manufacturer as its partner through a bidding process.

The bids will be finalised within six months, with a guarantee from the Railways to buy 800 electric locomotives of 12,000 horsepower each and 1,000 diesel locomotives of 4,500 and 6,000 horsepower each.