Russia: The offer price turned out to be 40 mln RUR ($0,52 mln USD) higher than the maximum set by the operator and so the application of Progress Rail was not allowed for evaluation, and the tender was declared invalid.
This decision was made by the tender commission of Yakutian Railways and is indicated in the protocol for considering the tender results that have been published this Wednesday. The operator wanted to purchase 6 single-section locomotives with a power of 3,310 kW and capable of running on a mixture of diesel fuel and LNG for max. price of 2.4 bln RUR with VAT ($31,1 mln USD). It follows from the protocol that only one application was submitted for the tender from Electro-Motive Locomotive Technologies LLC (owned by Caterpillar), which was ready to fulfill the contract within three years for 2.44 bln RUR (+1.6% to the limit price in RUR). Thus, on average, for one single-section diesel locomotive, Progress Rail asked for 407 mln RUR ($5,28 mln USD), VAT included.
The tender was held for the second time: it was announced on January 18. It is worth noting that from the date of publication to the day the commission began its work (February 1), the USD/RUR exchange rate increased by 1.9% (according to the Central Bank of the Russian Federation).
2TE3250 LNG-diesel locomotive manufactured by Progress Rail at the Yakutia Railways depot, April 2021. Source: Yakutia Railways
The first tender was announced back in October last year, and it assumed the same volumes of supply with the same maximum proce. However, at that time the auction did not take place, because no bids were submitted. Also in November, the Federal Antimonopoly Service of Russia (FAS) considered a complaint from TMH Industrial Solutions (part of TMH) about the conditions of the tender: the Russian manufacturer (the flagship model now is 3TE25K2M diesel locomotives) accused Yakutian Railways of the fact that the requirements for locomotives specified in the tender documentation correspond to the rolling stock of a particular manufacturer, an unlawful requirement was established for the production and assembly of the locomotive on the territory, which should be determined by Yakutian Railways, as well as in a number of other violations.
Thus, one of the requirements of the operator was the modular design and the bonnet-type of the locomotive (Russian manufacturers do no produce bonnet mainline locomotives). However, Yakutian Railways pointed out to this remark that “the modular design of diesel locomotives allows to quickly and efficiently carry out routine maintenance and repairs due to the system of open doors, reducing the time for work in the depot”. At the same time, TMH Industrial Solutions did not provide evidence that only Progress Rail locomotives meet the requirements of the competition, in connection with which the FAS commission recognized the complaint in this part as unfounded but satisfied it on a number of points and ordered Yakutia Railways to eliminate violations. Thus, the requirement about the territory of production was removed.
Comparing of the final requirements versions of the first and second tenders shows that Yakutian Railways also excluded the parameters for traction effort, the mandatory presence of an AC-AC transmission with axial traction control and high-voltage chambers with electrical blocking and an air boost system.
2TE3250 LNG-diesel locomotive manufactured by Progress Rail at Aldan station, July 2021. Source: Ivan Ligovsky, trainpix.org
The fact that the operator could purchase locomotives from Progress Rail became known in April 2021 as a 2TE3250 two-section locomotive arrived in Yakutia from Chicago, where the Progress Rail production site is located, for trials. As reported in Yakutian Railways, one of its features is the ability to operate on a mixture consisting of 20% diesel fuel and 80% gas.
Caterpillar already tried to enter the Russian market in 2013-2014: at that time, its subsidiary EMD worked with Uralvagonzavod on the possibility of joint developing and manufacturing mainline diesel locomotives in Russia with a localization level of 50%. However, then the project was stopped due to the introduction of US sanctions against the Russian manufacturer. In 2021, Caterpillar nevertheless received the first contract in the 1520 mm gauge region, but in Mongolia: 16 EMD SD70ACeLW diesel locomotives that meet the requirements of the EAEU technical regulations will be delivered to Bodi International. This company is implementing a project to build a railway network from the Tavan Tolgoi coal field to Gashuun Suhait border crossing.
