Name and Location
New Rolling Stock Procurement Programme, nationwide, South Africa.

Client
Passenger Rail Agency of South Africa (Prasa).

Project Description
The Department of Transport, through Prasa, is to invest in a new rail rolling stock fleet-renewal programme across South Africa to replace the current old and dilapidated fleet, which has reached the end of its design life.

The programme will upgrade and expand the current rail infrastructure by introducing new stock for commuter rail service Metrorail and long-distance locomotives and coaches for Shosholoza Meyl. It will also offer more routes between destinations in South Africa.

Value
The estimated cost of the project was initially R97-billion; however, government has since revised it to R123.5-billion.

An extra R14.5-billion will be invested in signalling, new depots, modern stations and integrated ticketing.

Duration
The programme would initially be rolled out over an 18-year period, which has now been revised to a 20-year period.

The 20-year procurement process will entail the first ten-year contract period starting in 2015, with the second period to start from 2025.

The first train is expected for delivery in 2015.

Latest Developments
Transport Minister Dipuo Peters has announced that Khiphunyawo Rail, Community Rail Services and Elgin-Identity Rail Corporation will be the 30% broad-based black economic-empowerment (BBBEE) shareholders of Gibela Rail Transportation, which has secured a R51-billion rolling stock supply contract with Prasa.

Gibela, comprising French multinational Alstom and local engineering company Actom, has secured the first ten-year rolling stock supply contract, with delivery of the first of 3 600 trains expected in 2015.

The second ten-year contract will start in 2025.

Prasa, which has already secured R40-billion in funding from government for the Gibela contract, is currently negotiating with the National Treasury for another R11-billion.

According to the passenger rail agency, the three winning bidders adhered to the criteria in its process of selecting BBBEE partners, which entailed indentifying the procurement of black enterprises currently involved in the rail sector, black enterprises wishing to enter the rail sector and investor black enterprises.

Black enterprise Khiphunyawo Rail is currently involved in rail and included South African Freight Logistics and Autism South Africa, among others; while new entrant Community Rail Services involves people with disabilities, black female youth, Parmtro Investments and Kaelo Investments.

Investor black enterprise Elgin-Identity Rail Corporation consists of Elgin Engineering, Identity Capital Partners and the Disability Empowerment Concerns Trust.

The selected entities will also participate in the shareholding of the Prasa and Gibela Rail Transportation employee trusts, as well as in the educational trust, which are all aimed at developing rail sector skills.

Prasa started the process of seeking BBBEE participation in October last year. Bidders submitted their proposals on December 14 and 74 proposals were received, of which 38 complied with the mandatory response requirements. These bidders were invited to participate in the next round of bidding, which closed on May 31.

Key Contracts and Suppliers
KPMG, Gibb Engineering and Science, Interfleet Technology and Edward Nathan Sonnenbergs (feasibility study), as well as Gibela Rail Transportation, comprising Alstom and Actom (Phase 1 – rolling stock supply contract).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
KPMG corporate finance, Walter Meyer, tel +27 21 408 7220 or email market.engagement@kpmg.co.za.
Prasa, tel +27 12 748 7000; or head of communications Nana Zenani, cell +27 82 626 8844 or email nzenani@prasa.com.
Actom, tel +27 11 820 5111 or fax +27 11 820 5100.
Alstom, tel +27 11 518 8100.