Transnet Freight Rail 10-64 locomotives acquisition programme, South Africa – update

16th October 2020

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Transnet Freight Rail (TFR) 10-64 locomotives acquisition programme.

Location
South Africa.

Project Owner/s
TFR.

Project Description
The project involves the acquisition of 1 064 locomotives – 599 electric and 465 diesel – for TFR's General Freight Business (GFB).

Contracts for the project have been awarded to consortiums led by four major international locomotive manufacturers – General Electric (GE), China North Rail (CNR), China South Rail (CSR) Zhuzhou Electric Locomotive and Bombardier Transportation (BT).

GE South Africa Technologies will supply 233 Class 44 diesel locomotives, CNR Rolling Stock South Africa (CNR RSSA) 232 Class 45 diesel locomotives, CSR Zhuzhou Electric Locomotive 359 Class 22E electric locomotives and BT South Africa (BTSA) 240 Class 23 E electric locomotives.

The contracts have stringent local-content, skills development and training commitments as dictated by the supplier development programme.

All but 70 locomotives will be built at Transnet Engineering (TE) plants in Pretoria and Durban. The suppliers have, to date, complied with and exceeded the minimum local-content criteria for rolling stock of 60% for electric locomotives and 55% for diesel locomotives.

Potential Job Creation
Since the award of the contract, BT, in partnership with its local supply chain, has created about 500 jobs, with more than 300 people working directly for Bombardier South Africa. Of these, 140 are directly involved in production of the locomotives. This will ramp up to 167 during peak production.

Bombardier is working with 220 local suppliers, of which 23 are black-owned small, medium-sized and microenterprises, and 12 are small development enterprises.

Capital Expenditure
As at March 31, 2018, the cumulative expenditure incurred on the 10-64 locomotive contract amounted to R30.1-billion, with R7.3-billion spent in the financial year to March.

Planned Start/End Date
Not stated.

Latest Developments
BT has reported that it is continuing to execute the contract, despite there being an ongoing dispute resolution process.

In 2019, Transnet declared the R49-billion programme, dubbed ‘10-64’, “irregular and illegal” and initiated a legal review of the contracts.

The 10-64 programme has since featured heavily at the Judicial Commission of Inquiry into Allegations of State Capture, headed by deputy chief justice Raymond Zondo, and is also the subject of a Special Investigating Unit (SIU) probe.

Under the programme, BT is contracted to supply 240 of the 599 electric locomotives ordered.

In November, Transnet announced that General Electric had completed the delivery of its locomotives, while CSR had delivered 249 units, BT 51 and CNR 21.

BT has told Engineering News that it has always acted in good faith in South Africa and is closely engaging with Transnet on “the next steps to ensure a fair and transparent assessment and clear our position”.

“In the recent past, Transnet has publicly referred to the contractual dispute resolution process to resolve certain pending matters with multiple locomotive manufacturers. Bombardier remains fully available to resolve any matter directly with its client . . . Bombardier is continuing to execute on the contract and the dispute resolution process will not affect the performance of the contract in any manner.”

The company adds that the “uninterrupted execution of the contract” has resulted in regular deliveries to TFR, which has deployed the TRAXX AFRICA locomotives to support its export of manganese ore. Since beginning service in December 2017, the TRAXX AFRICA locomotives have made about 1 400 round trips of 2 200 km each and have transported more than nine-million tons of cargo.

BT has said that the performance, together with the high fleet availability being achieved, reflects an ongoing and close working relationship with TFR and Transnet Engineering in integrating the modern locomotives into the South African network.

It refrains, however, from providing an update on how many TRAXX AFRICA locomotives have been delivered, referring Engineering News to Transnet instead.

In response, all Transnet has been willing to confirm is that the 10-64 contract is receiving priority attention and that the “desired outcome will be a commercially viable settlement, which takes into account public law considerations”.

“Further details on the outcome of the review of the contract will be communicated in due course,” Transnet has added, without providing an update on the state and status of the various contracts.

BT has confirmed that the delivery schedule has been negatively affected by Transnet’s belated insistence that production be located in Durban, KwaZulu-Natal, rather than in Koedoespoort, Gauteng.

“Transnet Engineering’s Durban facility required significant upgrades, as it was a heavy maintenance and testing site not equipped to produce and assemble new locomotives at the time that the contract was awarded.

“In contrast, the Koedoespoort facility is a long-established production and assembly site and is closer to all the local suppliers who are part of the value chain, as they are all based in Gauteng.”

BT has also insisted that it has “maximised” local manufacturing and assembly from the very first unit, with local content comprising 60% of the total contract value and more than 200 South African suppliers involved in supporting Bombardier, consequently creating about 300 direct and 1 800 indirect jobs.

Some of the key components and services being supplied by domestic firms include mechanical parts, pantographs, doors and windows, drives, driver’s desks, transformers, carbodies, warehousing, heating, ventilation, air conditioning and cooling towers, blowers, switches, lighting, brake resistors, axel and wheel sets, as well as braking systems.

BT has noted that it is certified as a Broad-Based Black Economic-Empowerment (B-BBEE) Level 2 contributor, exceeding the requirement to maintain B-BBEE Level 4 under the terms of the Transnet locomotive contract.

Key Contracts, Suppliers and Consultants
GE South Africa Technologies (233 diesel locomotives); CNR RSSA (232 diesel locomotives); CSR Zhuzhou Electric Locomotive (359 electric locomotives); BTSA (240 electric locomotives); Booyco (air conditioning for locomotive main cab); Duys (manufacture of the fuel tanks); Wabtec (radiators) and TE (manufacturing and assembling the locomotives’ platform, traction motors, bogies and alternators).

Contact Details for Project Information
TFR media relations manager Thembekile Klass, tel +27 11 544 9678 or email TFRmedia@transnet.net.
 
 

 

Edited by Creamer Media Reporter

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