BR’s 10 Locomotives: Impasse over payment not over yet

Although the Bangladesh Railway has started operating 10 locomotives that the South Korean company -- Hyundai Rotem -- supplied in breach of contract, the impasse over payment to the supplier is yet to be over.

Rather, the state-run transport agency may be in trouble as they will have to pay the Korean company if the Asian Development Bank (ADB), financier of the project, does not release the fund within this month -- the deadline set for winding up the previous payment, officials said.

The Manila-based multilateral lender is yet to give concurrence to a BR decision over the matter till yesterday, over a month after BR sent it to ADB, they said.

Meanwhile, at least two incidents were recorded in the last 20 days when the new locomotives failed during operation.

Incumbent Project Director Mohammad Hassan Mansur, however, blamed problems in carriages for the failure.

The BR started operating the locomotives from October 4, after more than one year of their arrival, following the opinion of an "independent reviewer."

Earlier, three committees found that the locomotives, supplied by Hyundai Rotem Company, did not meet some of the specifications mentioned in the contract. One committee even suggested punitive action against Hyundai.

But instead, the BR accepted the locomotives and asked the supplier to replace the alternators.

The metre-gauge diesel electric locomotives -- bought under a project worth around Tk 300 crore -- arrived in Bangladesh in September last year.

A BR commissioning committee said the technical specifications of four key components -- engines, alternators, compressors, and traction motors -- of the supplied locomotives did not match the specifications mentioned in the agreement.

In October last year, the railways minister ordered a probe into the matter. The then project director also halted 65 percent of the payment for the locomotives.

A probe committee, led by Md Farukuzzaman, additional secretary (law and land) of the ministry, in February this year recommended actions against Hyundai for supplying locomotives in deviation from the contract.

The committee report shows that the Hyundai supplied alternator model TA9-12CA9SE, but the agreement sought model TA12-CA9.

BR officials said the two models are different in terms of power output.

Later, the BR changed then project director Nur Ahmed Hossain and formed a technical committee led by BR's chief mechanical engineer (East).

The committee also found the difference between the contract and supply, but said they are not competent to give recommendations over the design of the locomotives, PD Hassan Mansur told The Daily Star yesterday.

The committee, however, suggested appointing a domestic or international reviewer to make decisions in this regard, he said.

The BR then appointed a retired additional secretary, who was also its former director, and he recommended accepting the locomotives, Mansur said.

He added that they submitted a proposal to the railways ministry following the suggestions.

"As we have asked Hyundai to replace the alternators, and they took six months to make the decision, we have decided to make payments sans the cost of alternators," he said.

Mansur added that following the ministry's directives, they wrote to ADB on September 22 for making a decision over the payment, but they were yet to respond.

He said the loan agreement period for the project has already expired in June and the additional period for settling down the previous expenditure would expire on October 31.

If the ADB does not release the fund or agree to do so within this deadline, a new complication may arise, he added.

In case the ADB declines to release the loan, the government will have to pay the money to Hyundai, another BR official said.