After almost seven years of dithering, the government on Wednesday revived hopes of setting up two mega diesel and electric locomotive manufacturing units in Bihar.

The Cabinet on Wednesday approved the proposal to start afresh the bidding process to set up the electric locomotive factory at Madhepura and diesel locomotive factory at Marhoura in Chapra, which constituency RJD chief Lalu Prasad represents in the Lok Sabha.

Mr. Prasad announced both these projects as Railway Minister in the first innings of the UPA.

He once represented Madhepura too in the Lok Sabha which is currently under the belt of JD(U) president Sharad Yadav.

These factories will be set up through joint ventures formed with loco manufacturers to be selected through international competitive bidding. The bids would be finalised within three months.

The electric locomotive factory will be set up at a cost of Rs.1,293.57 crore and the diesel engine factory is expected to cost Rs.2,052.58 crore. The equity contribution of the Railways will be limited.

The union government was to fund the two factories initially, but later decided that these would be set up through the PPP mode, but ahead of the 2009 elections it was declared that the government would fund these projects with little interest being shown by the private players.

Both these projects were relegated to the cold storage when the Trinamool Congress representatives were at the helm of affairs in the Rail Bhawan.

After Pawan Kumar Bansal took over the Railway Ministry and the insistence of Prime Minister Manmohan Singh to speed up the process of establishing these two projects, threads have been picked up to put them on the track. To get international manufacturers on board, the railways have promised to buy 800 electric locomotives of 12,000 HP and a mix of 1000 diesel engines of 4,500 HP and 6,000 HP over a 10 year period.

The objective is not only to attract foreign investment but also give a boost to the laggard infrastructure sector and push up the growth rate of the economy.


  • These factories will be set up through joint ventures

  • Bids will be finalised within three months