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Jul 30, 2012

Transnet outlines localisation thresholds for big locomotive tenders

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Freight logistics group Transnet will insist on a minimum local-content level of 60% for the 599 electric locomotives it plans to add to its general freight business (GFB) fleet by 2019 and will stipulate a level of at least 55% for the 465 diesel units it plans to procure over the same period.

The State-owned company, which issued the two tenders in late July, has also confirmed with Engineering News Online that it aims to have both contracts in place by the end of its current financial year, which runs to March 31, 2013. The schedule is subject, however, to gaining board and Public Finance Management Act sanction.

The procurement process is designed to lower the average age of Transnet Freight Rail’s (TFR’s) locomotive fleet from 37 years to around 20 years and is coupled to a plan to introduce 19 400 new wagons between 2013 and 2019.

The total GFB acquisition of 1 064 locomotives is the single-biggest procurement ever undertaken by Transnet and it has been estimated that the acquisition could involve an investment of R35-billion.

Given its scale, government, Transnet’s sole shareholder, is insisting that it be accompanied by significant localisation and supplier development in line with South Africa’s Competitive Supplier Development Programme.

“The tenders are programmatic and are targeted at industrialising and localising the manufacturing of equipment, focusing on skills development, job creation and preservation and the localisation of suppliers,” spokesperson Mboniso Sigonyela explains.

He says the large-scale tenders are informed by a desire to attract suppliers able to commit to delivering high levels of localisation, while creating of jobs, transferring of technical skills and intellectual property.

Transnet will also seek to increase the capability and capacity of the South African rolling stock industry, including Transnet Rail Engineering, and integrating such suppliers into the global supply chains of key original equipment manufacturers.

The group is optimistic that the security of demand offered by the tenders will allow suppliers to commit to investing in South African operations and enable suppliers to commit to transferring skills to the domestic manufacturing sector.

The actual units locomotives will be deployed on corridors carrying commodities such as manganese, domestic coal, chrome ore, magnetite, rock phosphate and containers, as well as agricultural products, such as wheat, grain and deciduous fruit.

Sigonyela says some of the locomotives will also be used to bolster over-border capacity to promote South Africa’s “gateway status”.

The investment is in line with the group’s larger R300-billion, seven-year market demand strategy, which aims to modernise and expand South Africa’s rail, ports and pipelines capacity.

For GFB, which currently has an estimated market share of 15%, the locomotive procurement programme has been designed to support the shift of rail-friendly products from road to rail and raise its market share to around 30%.

“The acquisitions are . . . in line with TFR's strategy to be one of the top five global railways by 2020,” Sigonyela concludes.

Both requests for proposal (RFP) will close at 10:00 on October 2, and both will attract a R40 000 nonrefundable tender charge. Formal compulsory site meetings for both tenders will be hosted at TFR’s head office in Parktown, Johannesburg, on August 16, and the RFP documentation will be available until August 10.
 

Edited by: Creamer Media Reporter
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