The railways sector and government have agreed to the creation of a framework to improve the monitoring and implementation of localisation commitments associated with multibillion-rand investments being undertaken by both Transnet and the Passenger Rail Agency of South Africa (PRASA).

Discussions involving the Rail Road Association (RRA), the Department of Trade and Industry, the South African Bureau of Standards, Transnet and PRASA would begin in earnest during May, following a two-day industry summit, which took place in Gauteng in April.

RRA CEO Bongani Mankewu tells Engineering News Online that the intention is to establish a new localisation framework by midyear, which had the support of the operators, the original-equipment manufacturers (OEMs), as well as domestic suppliers. Such a framework is viewed as necessary in light of the current “misalignment” between policy instruments designed to raise levels of local content in the sector and actual outcomes.

Mankewu argues that, despite railway rolling stock having been specifically designated for local procurement, the results have been mixed, while sentiment among domestic suppliers has remained weak notwithstanding the major investment commitments by the two State-owned operators.

In 2015, Transnet spread a R50-billion contract for the procurement of 1 064 new electric and diesel locomotives across four suppliers, including 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.

In 2013, meanwhile, PRASA 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.

In addition, both Transnet and PRASA have announced various other railways investments from maintaining or expanding the network to the purchase of new freight wagons.

However, supplier confidence remains depressed and has also not been buoyed by the African Union Heads of State recent decision to nominate South Africa as the continent’s rail engineering manufacturing hub. “We are just not getting the results,” Mankewu says, suggesting a serious “mismatch” between the policy objectives and outcomes on the factory floor.

A committee, involving both suppliers and operators, has been established to finalise the terms of reference for a new structure, which will oversee the implementation of localisation across the sector.

Once finalised, an assessment would be made of the localisation progress being made by the various OEMs, whereafter “proactive” interventions would be made to address problem areas.

“We want to be more proactive, because the next step is the payment of penalties, which really won’t help in building the domestic industry,” Mankewu concludes.