The Department of Public Enterprises and National Treasury will consolidate procurement for locomotives into a single institution, under Transnet, to ensure “efficiency and compliance with the localisation requirements”. The decision to set up the unit was made at the recent Cabinet lekgotla, which took place in Pretoria from August 16 to 19.

Minister in The Presidency for Performance Monitoring and Evaluation Jeff Radebe indicated that it would have oversight over the localisaiton programmes at both Transnet Freight Rail and the Passenger Rail Agency of South Africa (PRASA).

Details remain sketchy, but Radebe indicated that the aim was to “utilise economies of scale of all entities that belong to the State” to support higher levels of local content in rail rolling stock.

“You will recall that 18 months ago the African Union designated South Africa to be the manufacturing hub of locomotives [on the continent], so we need to ensure that South Africa is properly positioned to play that central role,” he said.

The stipulated thresholds for local production and content are 60% for electric locomotives and 55% for diesel locomotives, with various components, such as car body shells and bogie frames, to be fully localised from the start of the programme. Other components, such as traction motors and braking systems, are expected to be localised progressively over a six-year period.

The Department of Trade and Industry (DTI) has indicated previously that it is “concerned” about whether all four of the original-equipment manufacturers (OEMs) that have been awarded parts of a R50-billion contract to supply 1 064 electric and diesel locomotives to Transnet are in a position to meet the minimum thresholds set out in local-content designations for the rail rolling stock sector.

The suppliers include General Electric South Africa Technologies, China South Rail Zhuzhou Electric Locomotive, Bombardier Transportation South Africa and China North Rail Rolling Stock South Africa. The two Chinese companies have since merged.

PRASA, meanwhile, has awarded a R51-billion contract to the Gibela consortium to supply 600 X’Trapolis Mega commuter trains over ten years. The first 20 commuter trains are being built at an Alstom facility in Lapa, Brazil, with the balance to be assembled at a R1-billion new facility, which is being developed at a site in Dunnottar, near Nigel in Gauteng.

Deputy director-general for industrial policy Garth Strachan tells Engineering News Online that greater coordination around the programmes could improve local-content outcomes and ensure resources are pooled across OEMs and Transnet Engineering.

He says that, while progress is being made in rebuilding South Africa’s rail-linked industrial capabilities, several problems persist, one being a lack of alignment between the country’s black economic empowerment programme and initiatives to bolster local content and small business.

There is also an ongoing dispute over who should bear the financial burden associated with the verification of local content, with the South African Bureau of Standards having established to SATS 1286:2011 technical specification for that purpose.

The slowdown in the domestic and African economies is also affecting both local and export demand, as well as the profile of demand, which is now likely to be far less smooth than initially expected.

Transnet has reported that its multibillion-rand capital expenditure (capex) plan, which has already been rephased in response to weaker-than-expected market demand, could be further moderated under what it terms a ‘low-road scenario’.

Outlining its revised capital plan in its recently released 2016 integrated report, the group shows that, under its official 2017 plan, it will invest R277.8-billion over the seven-year period to 2023 and between R340-billion to R380-billion over the next ten years.

Capex of R22.8-billion is planned for the current financial year, which is lower than the nearly R30-billion invested last year and well below the peak of R33.6-billion recorded in the 2015 financial year. Capex then rises steadily from R36.2-billion in the 2018 financial year to a peak of nearly R50-billion in 2022.

However, the report also provides insight into a ‘low-road scenario’, which shaves R22.9-billion from the seven-year investment plan and lowers the overall budget for the period to R254.9-billion. Under the scenario, spending is moderated materially in 2017 to 2021, whereafter its rises steeply to peak at R54.3-billion in 2023.