http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.63Change: -0.02
R/$ = 12.27Change: 0.00
Au 1169.21 $/ozChange: 3.89
Pt 1084.00 $/ozChange: 1.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
Article   Comments   Other News   Research   Magazine  
 
 
Oct 26, 2012

New template, new tension?

Back
Africa|Design|Environment|PROJECT|rail|Rolling Stock|rolling-stock|Africa|Equipment|Maintenance|Technology|Blade Nzimande|South Africa
Africa|Design|Environment|PROJECT|rail|Rolling Stock|rolling-stock|Africa|Equipment|Maintenance|||
africa-company|design|environment|project|rail|rolling-stock|rolling stock|africa|equipment|maintenance|technology|blade-nzimande|south-africa-region
© Reuse this



There is little question that most South Africans have grown intolerant of black economic-empowerment (BEE) transactions that enrich a few ‘usual suspects’ but do little to transform the still highly racially skewed business environment.

South African Communist Party secretary-general Blade Nzimande has again criticised the way BEE is being pursued, saying there is a risk of creating a class of ‘compradors’, or black capitalists who owned shares in companies they could not run and who supported the maintenance of ‘semicolonial’ economic structures.

It will be interesting to see, therefore, whether the empowerment model being pursued by the State-owned Passenger Rail Agency of South Africa (Prasa), which is at the beginning stages of a multibillion-rand fleet procurement process, has the potential to offer a new template.

On the face of it, the process looks strange, even disingenuous. That is because the broad-based black economic-empowerment (BBBEE) request for proposals has been separated out from the tender for the design, manufacture and maintenance of new commuter trains for delivery from 2015.

In other words, the empowerment process is being conducted in parallel to the main equipment tender, for which seven companies and consortia submitted bids by the September 30 deadline.

That means that the winning rolling-stock supplier would hold 70% of the project delivery company, with the BBBEE equity participants holding the 30% balance.

The proponents say the separation of the two elements is informed by a desire to ensure a genuinely broad-based empowerment structure that is 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, is 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%).

Critics of the separation argue that it will lead to a “forced marriage” between the winning rolling-stock supplier and the winning BBBEE bidder. They add that the arrangement could well lead to a partnership that is even more short-term in nature than early-generation BEE deals, which saw partners flip their shares at the earliest opportunity.

The proponents, however, assert that there are sufficient legal and contractual instruments available to ensure that the preferred technology supplier and the preferred equity partner forge a workable, long-term partnership around the project, which could ultimately involve an investment of R123-billion and the purchase of 7 200 passenger coaches by 2035.

They also argue that the 65% localisation stipulation will provide considerable scope for black businesses keen to participate as suppliers to the Prasa fleet renewal programme. In other words, black business is being told to not simply aim to become passive holders of shares in a project company, but rather to invest in real businesses that are able to supply into what is poised to be a multidecade project.

The jury will no doubt be out on whether this new approach will result in broad-based participation and industrialisation, or whether it will create untenable tensions between international suppliers and the domestic partners that had no part in selecting.

Edited by: Terence Creamer
Creamer Media Editor
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Editorial Insight News
IDC research and information head Jorge Maia
Foreign direct investment (FDI) flows to South Africa fell by over 31% last year to $5.72-billion, from $8.3-billion in 2013, the latest World Investment Report (WIR 2015) shows. The decline in what is known to be a volatile number, drawn from South African Reserve...
The new operating philosophy outlined by acting Eskom CEO Brian Molefe sounds very much like the much maligned ‘keeping the lights on’ policy pursued in the immediate aftermath of the 2008 crisis. The strategy is based on finding the theoretical ‘sweet spot’ that...
The legal instrument governing the creation of the so-called Tripartite Free Trade Area (T-FTA) – encompassing 26 mostly Southern and East African countries – would be formally launched at the third Tripartite Summit being held in Sharm el-Sheikh, Egypt, this week....
More
 
 
Latest News
Updated 40 minutes ago Nigeria's Transcorp plans to spend $1.575-billion from 2016 to 2018 to raise its power generation capacity to 2 500 megawatts (MW) from 610 MW now, the company said on Thursday. Transcorp, which also has interest in hotels, oil and gas, said it expected the...
Updated 1 hour 9 minutes ago The ebola virus, economic decline in some countries, and South Africa’s new immigration regulations are to blame for the drop in tourist arrivals to South Africa, Grant Thornton Advisory Services said on Monday. About 150 000 fewer tourists visited South Africa in...
Updated 1 hour 13 minutes ago Strong economic growth in Mozambique is supported by major investments in the coal mining and natural gas sectors but stricter control over state-run firms is necessary, the International Monetary Fund said on Thursday. "Mozambique's continued strong growth...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
NHLANHLA NENE The main constraints to economic growth are domestic
Finance Minister Nhlanhla Nene earlier this month stated that, while South Africa’s 2015 economic growth target of 2% was achievable, it was not enough to deliver the tax revenue needed to combat the country’s challenges.
The World Steel Association has published the 2015 edition of the World Steel in Figures report, which shows an increase in steel production as well as provides an overview of steel industry activities from crude steel production to apparent steel use.
The 25-year master plan for Gauteng’s Aerotropolis project will go through a process of approval and adoption during June and July, says Aerotroplis project manager Jack van der Merwe. “We are also in the process of putting together a special purpose vehicle (SPV) to...
SOLAR PANELS The existing buildings in the Coega Industrial Development Zone lent themselves well to rooftop solar panel installations
The Coega Development Corporation (CDC) plans to fit 15 of its buildings, totalling 127 000 m2 of roof space, in the Coega Industrial Development Zone (IDZ), in the Eastern Cape, with solar panels.
The Supreme Court of Appeal’s (SCA’s) November 2014 judgment, ordering steel producer ArcelorMittal South Africa (AMSA) to hand over the 2003 Environmental Master Plan for its Vanderbijlpark steel plant to environmental pressure groups, confirmed the right of civil...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96