May 19, 2011
Govt wants Transnet to more than double local content of new locosBack
Departments Of Mineral Resources|Eskom|General Electric|Public Enterprises|Renewable-Energy|Transnet|South Africa|Freight Logistics|Manufacturing Centre|Rail Infrastructure|Rail Solutions|Rail Utilities|Malusi Gigaba
© Reuse this
Public Enterprises Minister Malusi Gigaba foresees particular opportunity for partnerships with suppliers of heavy-haul electric locomotives and says Transnet, which has a R110-billion capital expenditure programme for the coming five years (much of which will be directed towards rail), will enter dialogue with original equipment manufacturers (OEM) to explore localisation prospects.
"Our plan is to partner with the relevant OEMs to build South Africa's own locomotive manufacturing capability," Gigaba said in an address to the South African Chamber of Commerce and Industry. "Our aim is to more than double the quantity of local content embodied in the locomotives."
He has highlighted the recent R2,4-billion deal between Transnet and General Electric (GE), whereby Transnet Rail Engineering (TRE) will assemble 90 of the 100 diesel locomotives being purchased in South Africa.
The first locomotives are to be delivered this year and the last during 2012.The GE deal is also the biggest commitment by Transnet under the government-led Competitive Supplier Development Programme.
The idea will be to position South Africa as a niche engineering hub for specialised rail solutions and as a global manufacturing centre for OEM locomotive components.
There is also a near-term prospect of offering these products and services to other African countries that are also looking to expand their rail infrastructure. Further, there is potential to transform TRE, which currently mainly services Transnet Freight Rail, into a maintenance and repair centre for African rail utilities, as well as private operators.
Gigaba reveals that there will also be a concerted programme to unlock new sources of finance for the expansion of the country's freight rail network, particularly those corridors that could stimulate mining investment and expansions.
He acknowledges that Transnet's balance sheet presents an obstacle to tapping the post-crisis commodity revival, and reaffirms that a task team has been established to find ways to liberate developmental and commercial finance, as well as to enable miners themselves to share project risk as coinvestors. The team includes directors-general from the Departments of Mineral Resources and Public Enterprises, as well as representatives from the State-owned enterprises and the Chamber of Mines.
"We need new sources of finance to enable a quantum jump in the rate of investment in the capacity of these [iron-ore and coal] export corridors," he asserts, adding that equity and quasi-equity arrangements are being explored.
The immediate thrust, however, is on lowering the average age of Transnet's locomotives from over 33 years, as well as ensuring that sufficient locomotives and wagons are available to raise daily train movements from 680 to the network's potential of 1 700 trains a day.
No private sector participation deals have been struck, with the Minister indicating that these are still in the "planning" phase. He also indicates that the initial developments will probably focus on branch lines, partnerships designed to shift freight from road to rail and initiatives to reduce congestion around South Africa's key ports.
PRIVATE SECTOR & POWER
Gigaba also stresses that localisation, as well as private sector participation will increasingly feature in the electricity milieu, still dominated by State-owned Eskom, which is spending R549-billion on generation, transmission and distribution investments.
Private participation will initially be focused on the deployment of renewable-energy solutions and Gigaba assures that government is committed to ramping up the role of independent power producers (IPPs).
At present, there are only five IPPs operating in South Africa, but South Africa’s stated policy is for 30% of all new generation capacity to be delivered by private developers.
However, there are still several regulatory and legislative impediments, notwithstanding the recent publication of the integrated resource plan for electricity, which outlines a substantial role for IPPs in the roll-out of 37 300 MW of new capacity between 2010 and 2030.
Gigaba assures that the National Treasury and the National Energy Regulator are making independent progress on dealing with the constraints to investment, while work is also advancing in the creation of an independent system and market operator, which will evolve over time and will eventually be separated entirely from Eskom.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines
Updated 40 minutes ago While the South African government has aggressively advocated for the domestic beneficiation of locally mined minerals in recent years, stakeholders will be required to first implement “innovative solutions” to inherent domestic challenges before this can be...
Updated 56 minutes ago The connection between the appropriate political climate and the opportunity to participate in global science was clear from the South African example, University of Johannesburg physics Professor Simon Connell said on Monday, reflecting on the contribution of late...
Updated 1 hour 17 minutes ago Explosives and speciality chemicals group AECI on Monday said it would post higher earnings for the year to December. The JSE-listed group expected earnings and headline earnings a share for the year under review to be 20% higher than the respective 564c and 547c a...
Recent Research Reports
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 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...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
Projects in Progress - Second Edition (PDF Report)
Creamer Media’s second Projects in Progress supplement considers some of the major project developments under way, including high-profile energy and transport projects, as well as a few of the lower-profile public and private developments. What remains apparent is...
Water 2013: A review of South Africa’s water sector (PDF Report)
Creamer Media’s Water 2013 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Canadian Mining Roundup for June 2013 (PDF Report)
The June 2013 roundup includes details of the development of TSX-V-listed Aldridge Minerals’ flagship Yenipazar polymetallic project, in Turkey; the Canadian Nuclear Safety Commission’s renewal of Cameco’s uranium mining licence pertaining to the Cigar Lake...
This Week's Magazine
Mitsubishi Motors South Africa (MMSA) has introduced a 4x2 derivative of its Pajero Sport sports-utility vehicle (SUV), which will give it access to a substantial slice of the full-size SUV market, where it will compete with the likes of the Ford Everest, Chevrolet...
South African Energy Minister Ben Martins has affirmed that the government wants the country to be globally competitive in the nuclear sector. "Our responsibility has always been ... to ensure that, in nuclear energy, South Africa can compete with the rest of the...
Mercedes-Benz South Africa (MBSA) president and CEO Dr Martin Zimmermann describes the new S-Class as “a special place to be”, with the car creating a sense of “wellness” once you are seated inside the German brand’s flagship model. It is difficult to argue...
Water scarcity and water-quality issues are broadly recognised and understood in most political, business and civil organisations in South Africa, but solving water issues will require wide and continuous action in catchments and municipalities by organisations and...
Work is well under way on the R212-million Imvutshane dam, 30 km north-west of Stanger, in KwaZulu-Natal, which is a key link in supplying people in rural Maphumulo with a reliable source of safe drinking water.