The development of new industrial engines will cost $1 billion.
Transmash holding (TMH,) Russia's only producer of diesel locomotives, Atomenergomash and Russian Railways are to set up a consortium to develop next-generation industrial diesel engines. The project may cost as much as $1 billion. Yesterday, TMH promised to Prime Minister Vladimir Putin to present cost estimates of the project within the next three months.
During yesterday's visit by Prime Minister Vladimir Putin to the Kolomna plant, which is part of the Transmash holding, Andrei Bokarev, chairman of TMH's board of directors, talked about their plans to establish a consortium for the development of a new industrial diesel engine. In addition to TMH, it includes Atomenergomash and Russian Railways. Oboronprom is also expected to join. The idea is being discussed with the relevant ministries, including the Economic Development Ministry.
TMH refused to comment on these plans yesterday, explaining that the potential buyers' requirements for the new engine have not yet been fully determined. "A distinct programme with all figures will be submitted within the next three months," Bokarev was quoted as saying by RBC Daily.
The development and organisation of diesel engine production would cost about $1 billion, a source close to the talks told RBC Daily. The new company is expected to produce about 700 engines annually. "These are big costs that can be recouped only if we launch production on a commercial scale," he said.
Russian Railways' demand could absorb about 20%-25% of the future output. The role of the other partners is not yet clear.
The RBC Daily source expects that the state will help finance the project within a special targeted federal programme. However, Dmitry Peskov, Vladimir Putin's press secretary, assured RBC Daily that there was no need for state aid. "The partners themselves will finance the project," he said.
Marina Alexeyenkova, an expert with Renaissance Capital, says $1 billion in investments will suffice to buy modern technologies and customise them to suit the clients' technical needs, and also to launch series production. She projects the company's annual revenues at about $100-$250 billion. "With an expected margin of 15%, the costs will be recouped in about seven years," Alexeyenkova said.
These new engines are required to replace the old, obsolete Russian diesel engines in the production of new locomotives and reserve diesel generators in the nuclear power plant safety systems, and also to meet the needs of the defence industry. The consortium also plans to market them overseas.
TMH is selecting a foreign partner now whose technology could be used for the development of a new diesel engine. Talks are under way with General Electric, Cummins, Caterpillar, MTU, Wärtsilä, Stadler and other companies.
Yekaterina Godlevskaya