Oct 17, 2012
Decoupling of BEE, technology bids will broaden beneficiary base – PrasaBack
Engineering|Actom|Africa|Alstom|Locomotives|PROJECT|Transnet|Africa|Canada|South Africa|Spain|Switzerland|Equipment|Maintenance|Preferred Technology Supplier|Technology|Transport|Ben Martins|Lucky Montana|Rail|Sifiso Buthelezi|Locomotives|South Africa
© Reuse this
The broad-based black economic-empowerment (BBBEE) request for proposals (RFP) has been separated out from the tender for the design, manufacture and maintenance of new commuter trains for delivery from, 2015 and the BBBEE tender documentation is currently available for a fee of R5 000.
The process is being conducted in parallel to the main equipment tender, for which seven companies and consortia submitted bids by the September 30 deadline. These companies include CAF, of Spain; Bombadier, of Canada; China South Rail (CSR); China North Rail; Gibela Rail Transportation, which is a French consortium comprising Alstom and Actom; Dudula Rail, a consortium comprising ABB South Africa and Stadler, of Switzerland; and CSR/Wictra, consortium comprising CSR and Wictra, of South Africa.
The winning rolling-stock supplier would hold 70% of the project delivery company, with the BBBEE equity participants holding the 30% balance. The BBBEE partners would be subject to a three-year lock-in period.
Prasa chairperson Sifiso Buthelezi said the decision to separate out the BBBEE component was informed by the company’s desire to ensure a genuinely broad-based empowerment structure that was decoupled from the technology offering.
Under the scheme, Prasa would insist that 10% of the 30%, or 33% of what is available for empowerment equity, was to be held by an employee trust, to benefit staff below the senior management level. The balance would be divided between black businesses active in the rail industry (10%), passive black investors (7%) and an educational trust (3%).
CEO Lucky Montana acknowledged criticism of the separation, particularly by those suggesting that it would lead to a “forced marriage” between the winning rolling-stock supplier and the winning BBBEE bidder.
But he argued that there were sufficient legal and contractual instruments available to ensure that the preferred technology supplier and the preferred equity partner were able to forge a workable partnership around the project, which could ultimately involve an investment of R123-billion and the purchase of 7 200 passenger coaches by 2035.
In the first ten-year phase, which was the current focus, the National Treasury had set an affordability limit of R40-billion and the number of coaches delivered within that envelope was currently the subject of the competitive bidding process.
Montana stressed, too, that the 65% localisation stipulation would also provide considerable scope for black businesses keen to participate as suppliers to the Prasa fleet renewal programme.
Empowerment companies with existing relationships with the seven bidders would be eligible to participate in the BBBEE tender, but Prasa stressed that recognition of such associations would not be treated as exclusive arrangements.
A compulsory briefing session had been scheduled for November 1 and bids should be submitted by December 14. The evaluation and selection could be completed by January 31, after which the preferred equipment and BBBEE bidders would be given an opportunity to interface ahead of financial closure.
The preferred equipment supplier could be announced by the end of September and once the BBBEE partner was identified the two participants in the project delivery company would have until around mid-2013 to reach financial close.
It was also confirmed that Transnet Rail Engineering (TRE) would provide the facilities for the production of the passenger coaches and had also been designated in the tender documentation as the conduit through which all technology transfer would occur.
The idea was to use TRE as the platform for the creation of a local rail manufacturer, with the capacity to design, manufacture and maintain locomotives and passenger coaches for South Africa and for export. In return the Transnet subsidiary would be expected to invest in a customised facility at which the preferred Prasa bidder would manufacture and assemble the passenger coaches.
Transport Minister Ben Martins argued that there was an opportunity through the process to create a new “template” for the way in which government pursued empowerment deals – one that encouraged broad-based participation and was aligned to the country’s industrialisation ambitions.
Martins encouraged black business to participate in the tender, but also highlighted the opportunity arising for “black industrialists” to supply into the Prasa programme.
“It can’t be correct that, whenever black people participate in ventures of this nature they only do so by way of a certain percentage of shareholding . . . We have to see black individuals creating value in this country by becoming industrialists,” the Minister asserted.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Economy News
Article contains comments
Updated 28 minutes ago Rhodes Food Group Holdings, a South African manufacturer of frozen food and prepared meals, said on Monday it planned to raise R600-million ($56-million) through a listing in Johannesburg. Rhodes, which supplies major retailers such as Pick n Pay and Shoprite with...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...