GE, Indian minister meet to clear air over locomotive deal

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A new ES43ACmi for Indian Railways appears outside the erecting shops at GE Transportation's Erie, Pa., facility in August.
GE Transportation
LONDON — GE was jubilant in 2015 to ink a $2.5-billion deal to sell diesel-electric locomotives to Indian Railways, delivering 1,000 by 2026. Now, Chicago-based GE Transportation is engaged in a rear-guard action to save the deal from unraveling as Indian politicians publically express interest in a 100-percent electric railroad in the future, as first reported in the Wall Street Journal.  The move was powered by Delhi’s desire to slash Indian Railways’ annual $2.4 billion diesel fuel bill by a switch to electric traction.

The Indian rail ministry clarified on Wednesday evening that the project with GE will carry on as planned and there is no question of closing it down, despite three weeks of uncertainty over the diesel deal.

“I am open to new suggestions including electrification of railways, but that doesn't mean existing projects — like the present GE project — stop," new Railways Minister Piyush Goyal told Indian financial media on Wednesday evening after a meeting with Hong Kong-based GE Vice Chairman John Rice.

The men met to preserve the deal that saw the company agree to manufacture the locomotives in a factory in a remote corner of the Indian countryside, boosting employment and the local economy.

Just under two months ago, GE Transportation rolled out Indian Railways’ first Evolution Series locomotive from the paint shop near Erie, Pa., revealing the railroad's new paint scheme. The ES43ACmi (Indian Railways’ class WDG4G) locomotive, painted in a distinctive red-and-yellow pattern was to be the first of 1,000 diesel freight locomotives that GE Transportation would deliver. It is already in transit and is expected to arrive in India in early October.

Goyal met last week with GE top brass to say that the Indian railways will not now require diesel locomotives as it is switching fully to electric traction.
Delhi does not want GE, which does not manufacture electric locomotives, to lose any investment and has offered several options to the company, a senior railways ministry official told Indian media. These include manufacturing electric engines, commissioning a locomotive maintenance shed or any other related facility, with the railways offering an assured contract, he said.

“We don’t want to hamper the investment environment in the country. We have offered GE various options. They will work with our officials to find out the right solution,” Goyal said.

In response, GE has warned Delhi that altering the deal would “undermine one of the most promising infrastructure projects in the country,” GE officials wrote in an emailed statement on Tuesday. The government may also be on the hook for “substantial fees associated with this project,” deter future foreign investors and hurt the "Make in India" mission if the Indian Railways alters its deal to buy GE diesel locomotives, the company warned.

France-based locomotive maker, Alstom, is also set to supply freight locomotives to Indian Railways — heavy duty all-electric models. Indian media alluded to that order in reporting this week.

India has nearly 19,000 route miles of electrified lines, or about half of all passenger and about 60 percent of all freight routes, according to the Indian government.  The government has expanded network electrification since independence from the United Kingdom in 1947.
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