Oct 17, 2012
Decoupling of BEE, technology bids will broaden beneficiary base – PrasaBack
Engineering|Actom|Africa|Alstom|Design|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 Construction News
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
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 road...
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.
This Week's Magazine
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
The World Wide Fund for Nature’s (WWF’s) 2014 Living Planet Index (LPI) indicates that there has been a 52% decline in vertebrate species since 1970. The Index tracked the trends of 10 000 discrete populations of over 3000 vertebrate species between 1970 and 2010.
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
Metrorail’s first new passenger train will arrive in November next year, says Passenger Rail Agency of South Africa (PRASA) CEO Lucky Montana. “Next year we will be able to put our hands around the infrastructure and equipment we have been talking about for so long.”
The Competition Commission has launched an investigation into what it says are “price fixing, market division and collusive tendering in the market for the manufacture and supply of automotive components to original equipment manufacturers” (OEMs, or vehicle...