Home Affairs Minister Malusi Gigaba  Photo: Sarah Makoe
Home Affairs Minister Malusi Gigaba Photo: Sarah Makoe

‘Capital investment by Transnet critical’

By Time of article published Mar 25, 2011

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Massive capital investment by logistics group Transnet will become a major driver of economic growth in South Africa, Public Enterprises Minister Malusi Gigaba said on Thursday.

In a statement, Gigaba said South Africa was “well placed” as a key player in southern and eastern Africa thanks to extensive fleet procurement by Transnet.

“As a result, Transnet plans to spend billions of rands on capital expenditure for rail-related equipment and infrastructure as well as expanding maintenance and repair capacity at Transnet Rail Engineering, which is responsible for the manufacture and repair of Transnet's rolling stock,” Gigaba told an investment forum in Dubai.

Gigaba said the locomotive and wagon fleet at Transnet Freight Rail, an operating division of Transnet, was on average 26 years old and like other African logistics companies, was confronted with major infrastructure problems.

“The massive recapitalisation programme of Transnet is regarded as having the potential to become a major driver for economic growth in South Africa,” he said.

“Much attention and effort is being given to increasing local spend and to use this capital expenditure programme to entrench world class technologies, suppliers and service providers in South Africa.”

Gigaba said South Africa's Competitive Supplier Development Programme (CSDP) was aimed at reducing the import content of the capital and associated operational expenditures, while increasing the long term economic benefits for the local supplier industry.

While volumes in other Southern African Development Community (SADC) countries were not sufficient to warrant a CSDP programme, consolidation of demand provided an opportunity to ensure a steady state of investment to deliver benefits of a CSDP-type programme for the region

Gigaba said South Africa offered the region the opportunity to utilise the CSDP and Transnet Rail Engineering capabilities to contribute to maintenance capability as well as the regional rolling stock leasing pool. - Sapa

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