South Africa’s Transnet and China’s CRRC E-Loco announced on Wednesday that an in-principle agreement had been reached “towards the resolution of all current legal disputes between the two companies, to enable support to enhance Transnet Freight Rail’s (TFR’s) ability to serve customer demand on an urgent basis”.

In a short statement, the two companies said that the next steps would be to finalise a definitive settlement agreement and complete the resolution of the current legal disputes.

Moves towards a settlement follow a high-level meeting between the leadership of the two organisations, with the Transnet delegation having been led by CEO Portia Derby.

The announcement also follows Transnet’s launching, in mid-August, of a High Court application to seek an order compelling CRRC E-Loco to release spare parts and components required to return 120 locomotives to service.

Transnet said the parts and components had been imported to service and maintain the 95 20E and 100 21E locomotives acquired from CRRC in 2012 and 2014 respectively.

Access to the spare parts and components, the utility added, would allow it to bring back to service 53 Class 20E and 67 Class 21E locomotives, which have been standing idle as a result of the inability to access the required spares and components.

The standoff with CRRC arose following Transnet’s 2019 decision to halt the so-called 10-64 contract, for 465 diesel and 599 electric locomotives, in which CRRC participated along with three other original equipment manufacturers.

Transnet deemed the contracts, which featured during proceedings at the State Capture commission, to be “irregular and illegal”.

The cancellation of the contracts has left TFR with a locomotive shortfall, which Transnet aims to address through the issuance of a new tender later this year.

It has been amplified, however, by CRRC’s refusal to provide Transnet with the spares required to maintain those locomotives already supplied to the utility.

Several TFR customers have expressed dismay at the poor performance of the rail business over the past few years, owing to a shortage of locomotives, as well as ongoing theft across the rail network, with TFR having lost a total of 1 500 km of overhead copper wire to theft in 2021/22.