Time for Reset Part-II: Failed Loco Failed Model-KMG’s Dabhol

“Time for Reset – Part-1”: In Part-I, we examined the cunning actions of Sudheer Kumar, often referred to as the Rasputin of the Tsars of Rail Bhawan. Now, we present to you, dear reader, the long-lasting consequences of the decisions he made, which will continue to afflict the Indian Railways for the next four decades.

By taking advantage of the enthusiasm of the new government, eager to promote development through public investment, #SudheerKumar cleverly misled the #IndianRailways into purchasing 1000 #diesel locomotives and potentially another 800-1000 #electric locomotives. However, hidden within the #agreements signed off by the rail bureaucracy was a crucial detail – the Indian Railways had effectively created its own version of the infamous Enron Dabhol project.

To understand why the #Dabhol project faced opposition, it is important to consider the factors of lack of #transparency and an imbalanced #contract. These issues were highlighted in a report headed by a retired #HomeSecretary, which succinctly summarized the problems faced by the project.

“The Committee has prima facie found infirmities in several decisions taken in respect of the Enron project at different points of time by successive governments and agencies in the Centre and state.”

Energy Review Committee headed by former home secretary #MadhavGodbole

One can read more about in this Outlook story: “The Real Story Of Dabhol: If a judicial probe, suggested by the committee, is ordered into the Enron deal, it could embarrass three governments”

We now give few quotes from The #Outlook article, which was published in May 2001.

A five-member high-powered committee headed by Madhav Godbole—and including former Union economic affairs secretary E.A.S. Sarma, #HDFC chairman Deepak Parekh, #TERI chairman Rajendra Pachauri and #Maharashtra government official Vinay Mohan Lal—has recommended a #judicial probe into the entire #Enron power project deal saying it signified, “the utter failure of governance that seems to have characterised almost every step of the decision-making process relating to the Dabhol project.”
…
“It strains belief to accept that such widespread and consistent failure to execute responsibilities is purely coincidental,”

What The Outlook finds in 2001, earily speaks of Sudheer Kumar’s Madhepura and Marowrah (looks like Sudheer Kumar’s template):

“Since the commissioning of the plant in May 1999, the #MSEB has paid ₹1,607 crore for the power it has bought from Dabhol. If the same #watttage of power had been bought from Indian-built power plants fired by indigenous coal, the payment would have been approximately ₹736 crore. In the first year-and-a-half of its operation itself, the dpc had drained the Maharashtra exchequer of nearly ₹1,000 crore.”
…
The committee further spells out the losses incurred through the deal.

“Subsequent to the commissioning of the DPC, the financial deterioration of MSEB has been rapid. While the MSEB was in profit in 1998-99, it plunged into huge losses of ₹1681 crore in 1999-2000.”
…
Significantly, the World Bank in 1993 had predicted the system’s inherent weaknesses. In a letter written to the then power secretary, R. Vasudevan, a top bank official had said that—

“after a detailed review of the analytical framework and costing assumptions, we reconfirm our earlier conclusion that the Dabhol project, as presently formulated, is not economically justified” and that in “our assessment the project is too large to enter the mseb system in 1998. The proposed base-load operation could result in uneconomic plant dispatch, as already existing lower variable cost coal power would be replaced by the higher costing power.”

This situation highlights how Central Electricity Authority then and #RDSO, and the #technical and #traffic directorates of #RailBhawan acting as pawns, easily manipulated by #political and #bureaucratic figures. When faced with pressure, these authorities quickly submit to the desires of their superiors. Within the railway system, officers immediately analyze what their bosses want and produce reports accordingly, knowing they will face no repercussions if their bosses are satisfied. It is worth noting that there have been no consequences thus far for the officers conducting business on #IREPS. This elucidates why individuals of questionable integrity face no consequences while capable, honest officers see their careers suffer and eventually fade away.

Talking of Madhepura and Marowrah-Looking at Precedences

Madhepura failed to consider the more affordable options available. The specifications were based on flawed assumptions and therefore flawed themselves. No one bothered to question why exactly should a locomotive be purchased, especially by the #traffic directorates. In #Madhepura, they paid ₹35 crore for 12,000 horsepower, whereas #CLW, #BLW, #PLW, and #BHEL offered the same for #21 crore, with a 30% higher #tractive effort. Many zonal railways refused to include this #locomotive in their system until Mr #AshwiniVaishnaw endorsed it after discussing with #SudheerKumar and tweeting that it was the best locomotive. #Sudheer’s purge have silenced those who could have provided sensible input in the higher ranks.

https://twitter.com/AshwiniVaishnaw/status/1472630966141161473?s=20

Not just in #Dabhol, precedences exist galore with lessons to mitigate losses to the government, windfall tax has been imposed on oil refineries, there has been a change in licensing structure for #telecom from fixed to #revenue sharing, and there have been renegotiations of #power in fixed cost #PPAs from #UMPPs (Ultra Mega Power Projects). However, there are concerns about the bleed caused by #Madhepura and why renegotiations have not been conducted. Sufficient price discoveries have taken place since its signing, and ball park costs can be determined. It is puzzling why this issue does not concern the Rail Bhawan.

Furthermore, the impact of #Marowrah on diesel locomotive building capabilities in India has not been adequately explained to the government. This capacity could have supported the Indian aspiration of #manufacturing indigenous marine engines. However, the decision to prioritize Marowrah has killed progress on this instead of thinking outside the box-which would have been true transformation. While cheaper #diesel locomotives from the Indian Railways fleet are available and sitting idle, waiting for retirement, the Indian Railways continues to spend an estimated ₹2000 crores every year on acquiring more expensive Marowrah #locomotives.

Who in the all powerful 3rd Floor of Rail Bhawan possesses the #clarity, #competence, #commitment, and #credibility? Cover of the Sudheer Kumar’s  book however is not the epitome of his legacy. His decisions on mauling and eating in to the vitals of #railways – making railways forget their basic purpose of reducing the unit cost of #transportation while delivering #safe and #reliable services.

If passenger segment is bleeding segment for #IndianRailways, why on earth spend 100% more on a shorter train which needs upgradation of #traction distribution network of IR? Such decisions like that of #IRMS are his true legacies. This is #Sudheer_Sense for you Mr Vaishnaw. By empowering Sudheer Kumar, you have helped create not one but many Dabhols in Indian Railway.

But as we said, give razor in a monkey’s hand what more do you expect? “#KMG का आतंक! समय बताएगा कि कौन सच के साथ था!”

As a senior retired railwayman quipped, with so much of money in hand, the tsars acted as #AnilAmbani, not like #MukeshAmbani.