Railway minister Mamata Banerjee’s pet project of setting up a new coach factory at Kanchrapara in West Bengal may put the ministry’s other coach manufacturing units on a slow track.

Rites –a 100 per cent subsidiary of the Indian Railways (IR) – has invited bids for appointment of consultants to manage the bidding to select a private developer that would set up a new rail coach factory at Kanchrapara.

The project is estimated to cost about Rs 10,000 crore. Under the agreement, railways will lease out land to a private company for about 30 years. It will have an installed capacity of 1,000 coaches per year. However, it will start with 500 coaches only.

The construction of a new unit may impact productivity of other factories including Rail Coach Factory (RCF) at Kapurthala, Integral Coach Factory (ICF) and Rail Coach Factory (RCF) at Raebareli.

“There are already four-five production units. While RCF Kapurthala can manufacture 1,500 coaches, ICF and RCF at Raebareli together can produce another 2,500 coaches. There is a demand for 3,000-3,500 coaches every year. The construction of another coach factory would put extra burden in terms of under-utilisation of existing capacities,” a senior railway ministry official said on the condition of anonymity.

The new unit to be built in public-private partnership will give an edge to private companies over government units. “Private companies will come only if the proposal is made attractive in long-term. Once they (private company) sign an agreement, the government will have to ensure that the unit is not under-utilised. Therefore, there will be possibility of shifting orders from companies such as RCF and ICF to the new unit,” the official explained.

Banerjee, while presenting the railway budget for 2009-10, had announced setting up of a new factory at Kanchrapara-Halisahar railway complex with annual capacity of 500 EMU/MEMU and metro coaches per year. The minister had said that the land was already available for the project.