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Transnet issues new tender to fix broken China-made locomotives which were part of a fraudulent tender

‘This is a critical intervention not only for Transnet’s sustainability, but for the South African economy.’ File Image: IOL

‘This is a critical intervention not only for Transnet’s sustainability, but for the South African economy.’ File Image: IOL

Published Jan 13, 2023


Transnet, now deadlocked with a Chinese train maker that had been part of a fraudulent tender, has issued a tender for any other company that is able to fix its new locomotives.

Transnet said yesterday it had reached an impasse with the manufacturer of critical spare parts, China Railway Rolling Stock Corporation (CRRC E-loco), following the company's unwillingness to engage with authorities in South Africa to normalise its operations in the country.

An open competitive tender would be issued urgently, in a bid to rehabilitate non-operational Chinese trains, Transnet said in a statement.

The parastatal said it would invite any eligible Original Equipment Manufacturer (OEM) to step in to help with the broken trains.

“This is a critical intervention not only for Transnet’s sustainability, but for the South African economy. The CRRC locomotives directly impact three major corridors, North, Northeast, and Cape corridors, that account for roughly 50% of Transnet Freight Rail’s revenue, and support three primary mining segments: export coal, chrome, and manganese,” it said.

The two companies have been engaged in legal battles after Transnet stopped the supply of more than 1000 locomotives from companies including CRRC, citing that some contracts were irregular, and unlawfully awarded by the previous board.

Last year, the parastatal said that it had reached an agreement with the local division of CRRC towards the resolution of all current legal disputes between them.

Transnet said that after intensive good-faith negotiations, and following the conclusion of an In-Principle Settlement Agreement on August 30, 2022, it had concluded a definitive settlement agreement with CRRC on November 25, 2022.

“A key contingent requirement introduced by CRRC at the time of the In-Principle Agreement and also included in the definitive agreement is the normalising of CRRC’s operation in South Africa by the South African Revenue Service (Sars) and the South African Reserve Bank (Sarb) to allow Transnet to give effect to the definitive agreement,” Transnet said.

According to Transnet, both Sars and the Sarb are required to follow statutory prescript in considering applications by CRRC to normalise its operations in South Africa.

“The Definitive Settlement Agreement is meant to enable rehabilitation of non-operational 22E locomotives, currently 161, long-term material and reliability support to Transnet, the repayment to Transnet of unjustified profits by CRRC, and the delivery of the remaining 99 locomotives at the corrected price, subject to the outcome of Transnet and the SIU’s Review Application," it said.

Transnet said in addition, on January 13, 2023, it would issue a confined tender to the other OEMs for the repairs of other locomotives, that came from Wabtech, Mitsui, and Alstom.

“The resolution of this matter is key in supporting Transnet’s efforts to normalise its operations,” it said.

Meanwhile, the Minerals Council of South Africa has called for the resignation of two of Transnet’s senior management as it blamed them for Transnet's woes, that had cost mining groups about R50 billion in mining revenue last year, due to delays and disruptions on rail and at ports.

The council which speaks for mining industry companies, called for Transnet CEO Portia Derby and Transnet Freight Rail (TRF) CEO Sizakele Mzimela to step down as the state-owned firm has been plagued with logistical failures.

A council spokesperson said yesterday however that they and Transnet’ management were now working together on various initiatives to tackle the rail problems.