Global rail industry braces for SA tender

2012-09-22 11:28

South Africa’s rail infrastructure was the central topic of the InnoTrans expo, the world’s biggest rail-industry trade show, which is held every two years. It took place in Germany’s capital Berlin this week.

Giants of the rail industry, including Alstom of France, Siemens of Germany, General Electric of the US and Bombardier of Canada are readying themselves for an enormous investment by South Africa into rail passenger transport.

The tender, for the supply of 7 200 passenger coaches to the Passenger Rail Agency of SA (Prasa), valued at R123 billion over 20 years, is one of the world’s three largest rail projects being launched this year. It is the anchor project to re-establish the country’s once-proud commuter-rail industry.

Feverish preparations are also under way for a number of Transnet tenders, which aim to increase its number of locomotives from the present 148 to 648 by 2019.
In this period, Transnet will invest R300 billion in new infrastructure.

Prasa expects the winning bidder for the 7 200 passenger coaches to deliver products with locally produced content of 65%.

The successful bidder will thus have to establish a commuter-rail manufacturing industry in the country that will employ about 2 500 people. The supply chain will, however, increase the total number of jobs created to about 75 000.

The French company Alstom, which also plays a role in South Africa’s electricity industry; and the Canadian group Bombardier, which supplied the Gautrain, are considered favourites to win this enormous contract, but there are at least 11 other suppliers who will bid.

The tender documents contain ambitious plans for the establishment of modern, urban transport systems and urban renewal based on rail infrastructure. Alstom and Bombardier specialise in this.

The tender process will reach a critical stage on Tuesday when Prasa chief executive Lucky Montana announces its requirements for BEE candidates.

The BEE partners will have a combined share of 30% in the project.

The initial BEE transaction’s value is estimated at R17 billion, which will make the Prasa project the country’s biggest BEE transaction yet.

Prasa will, however, appoint its own BEE partner because it is determined to ensure that broad-based empowerment flows from the project.

Montana has declared that he will personally ensure BEE candidates who have already benefited in other areas will not be included in the Prasa project.

These comments have led to a serious clash with the Black Business Council, its chairperson Sandile Zungu in particular.

There are major doubts that Montana will be able to withstand the political pressure that the council and its members can bring to bear because of their connections with the ANC.

Alstom already has two projects in North Africa – in Algeria and Morocco – and says it is determined to win this tender.

It divides its operations into four departments – manufacturing, engineering, project management and supply chain management.

“It is an extremely complicated project for us because it involves creating a whole commuter-rail manufacturing industry in South Africa,” said Henri Poupart-Lafarge, the chief executive of Alstom’s transport division.

This group – which already has a workforce of 350 in South Africa, with about 3 000 employees working for its subcontractors in the country – considers the Prasa tender, as well as the Transnet tenders, decisive for its future representation on the continent.

“If we fail to win, it will be difficult to make a return to the region,” Poupart-Lafarge told a group of journalists that Alstom brought to Germany.

He emphasised how complicated the South African projects will be, not just for the successful bidder, but for the country’s transport authorities.

He said: “A structure for the country’s future rail industry must be decided on.

“We are used to complicated projects, but this one combines several challenges. That is why we invested so much time in the preparation of our bid. A challenge of this sort is not easy, but we have already done it successfully, including in India and Russia.

“It is easy to make a train and ship it anywhere in the world, but it’s another matter entirely to set up a new industry.”

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