Name of the Project
Transnet Freight Rail (TFR) 10-64 locomotives acquisition programme.

Location
South Africa.

Project Owner/s
TFR.

Project Description
The project involves the acquisition of 1 064 locomotives – 599 electric and 465 diesel – for TFR's General Freight Business (GFB).

Contracts for the project were awarded to consortiums led by four major international locomotive manufacturers – General Electric (GE), China North Rail (CNR), China South Rail (CSR) Zhuzhou Electric Locomotive and Bombardier Transportation (BT).

GE South Africa Technologies will supply 233 Class 44 diesel locomotives, CNR Rolling Stock South Africa (CNR RSSA) 232 Class 45 diesel locomotives, CSR Zhuzhou Electric Locomotive 359 Class 22E electric locomotives and BT South Africa (BTSA) 240 Class 23 E electric locomotives.

The contracts have stringent local-content, skills development and training commitments as dictated by the supplier development programme.

All but 70 locomotives will be built at Transnet Engineering (TE) plants in Pretoria and Durban. The suppliers have, to date, complied with and exceeded the minimum local-content criteria for rolling stock of 60% for electric locomotives and 55% for diesel locomotives.

Potential Job Creation
Since the award of the contract, BT, in partnership with its local supply chain, has created about 500 jobs, with more than 300 people working directly for BTSA. Of these, 140 are directly involved in production of the locomotives. This will ramp up to 167 during peak production.

Bombardier is working with 220 local suppliers, of which 23 are black-owned small, medium-sized and microenterprises, and 12 are small development enterprises.

Capital Expenditure
R54.5-billion.

Planned Start/End Date
Not stated.

Latest Developments
TFR CEO Sizakele Mzimela has reported that the group’s plan to procure new locomotives will be put on hold in light of the recent in-principle agreements reached between Transnet and two original equipment manufacturers with which it has been in legal dispute – CRRC E-Loco (the merger between CNR and CSR), of China, and Alstom, which recently acquired BT.

Mzimela has reported that the agreements are likely to result in TFR securing much-needed spares, the absence of which has left 311 locomotives standing idle, as well as the outstanding locomotives procured in 2015 under the 10-64 contract, which was the subject of intense State-capture scrutiny during the Zondo Commission.

The inquiry found that the increase in the price of the procurement of the 1 064 electric and diesel locomotives from R38.6-billion to R54.5-billion was based on misrepresentations by senior executives and was to the detriment of Transnet, which had subsequently declared the contracts unlawful.

In August, Transnet and CRRC E-Loco announced an in-principle agreement in relation to legal disputes between the companies, with a similar agreement reached with Alstom in early October.

Prior to the agreements, Transnet CEO Portia Derby indicated that the group was preparing to procure about 400 new locomotives to close the gap given that Transnet had taken delivery of 595 locomotives under the 10-64 contract. The tender was initially expected for release in July, but never materialised.

Mzimela also reported that the agreement opened the way for TFR to receive the spares it required from CRRC E-Loco to return the 311 idle locomotives to service, which would alleviate the capacity constraints on several corridors, most notably the North Corridor, which transports export coal. The spares are required for the 53 Class 20E and 67 Class 21E locomotives.

“The in-principle agreement that has been reached with the Chinese will result in them helping us to bring back to service the long-standing locos first, but also to complete, once everything has been finalised, the supply of the outstanding number of locomotives that would have been part of the initial order,” Mzimela said.

It is anticipated that the agreement with Alstom will similarly allow for the completion of that contract, with Transnet having revealed recently that 85 of the BT locomotives had been delivered to date.

Overall, it is understood that Transnet has taken delivery of 595 locomotives arising from the 2015 contract, representing 56% of the original order.

Key Contracts, Suppliers and Consultants
GE South Africa Technologies (233 diesel locomotives); CNR RSSA (232 diesel locomotives); CSR Zhuzhou Electric Locomotive (359 electric locomotives); BTSA (240 electric locomotives); Booyco (air conditioning for locomotive main cab); Duys (manufacture of the fuel tanks); Wabtec (radiators) and TE (manufacturing and assembling the locomotives’ platform, traction motors, bogies and alternators).

Contact Details for Project Information
TFR media relations manager Thembekile Klass, tel +27 11 544 9678 or email TFRmedia@transnet.net.