A new locomotive will be built in Romania via a US - Romania partnership.

Grampet Group, the largest private railway holding in Central and South-Eastern Europe, which is owned by Romanian businessman Gruia Stoica, announced a strategic partnership with U.S. group Caterpillar for the development and construction of a new type of locomotive.

The locomotive - Terra Nova - will be produced at Craiova mostly for export. The companies have been working on the project for a year.

Produced by Electroputere VFU Craiova - a company within the Grampet Group, the new engine is powered by two Caterpillar Diesel motors with a total of 1,260 horse power. The two groups will continue the partnership in order to develop a more powerful locomotive.

The company's representatives said they expect to produce some 360 units in the next 10 years, with a production capacity of 3 locomotives per month. It has already announced a pre-contract to deliver eight such engines.

“The engine is called Terra Nova and is among the main three projects of Caterpillar. Electroputere VFU Craiova created an assembly line for these locomotives which are projected to be used on any type of railway”, Gratian Calin, Grampet Group vice-president said.

Craiova used to be one of the best known centers for locomotive construction. In the last 50 years, about 8,000 railway engines were built there.

However, in the last 20 years production declined. Electroputere Craiova, which used to be one of the Romania’s largest industrial companies, was split into pieces. In 2007, Saudi group Al-Arrab bought the company from the Romanian state and promised to bring it back to its former glory, but in January 2013 they sold the locomotive division to Grampet.

The Romanian group also took over Reloc Craiova, a smaller locomotive producer in the same city. Grampet also owns a wagon factory at Pascani.

However, the group’s main business is rail freight, which it operates in all of Central and South-Eastern Europe. In 2012, the group participated in the privatization of CFR Marfa, the state owned freight railway operator in Romania, which it won, but the contract was never signed. In January 2014, Gruia Stoica was arrested for an alleged bid rigging regarding a contract with another state owned company, Complexul Energetic Oltenia.

Andrei Chirileasa, andrei@romania-insider.com