Transnet secures R3BN loan for locomotives

By Drum Digital
28 March 2014

Transport parastatal Transnet has secured a R3 billion loan for its rail contract to manufacture 1064 locomotives.

 Transport parastatal Transnet has secured a R3 billion loan for its rail contract to manufacture 1064 locomotives, it said on Friday.

"Transnet successfully concluded a loan facility amounting to R3bn early this week with FirstRand Bank, Rand Merchant Bank, China Construction Bank Corporation, and KFW Development Bank of Germany," spokesman Mboniso Sigonyela said in a statement.

The funds would be used to finance some of the company's cash requirements for the recently awarded R50bn contract to build the locomotives.

"This is in line with our commitment to raise cost-effective funding from diversified sources, including export credit agencies, development finance institutions, local and international banks, and local and international debt capital markets," he said. The contract for the locomotives was awarded to four manufacturers earlier this month. The project was intended to transform the country's rail industry by growing existing small businesses and creating new ones, CEO Brian Molefe said at the time.

"We are going to create and preserve approximately 30,000 jobs."

The contracts were awarded to CSR Zhuzhou Electric Locomotive and Bombardier Transportation SA to supply 599 electric locomotives, while General Electric South Africa Technologies and CNR Rolling Stock South Africa (Pty) Ltd would build and supply 465 diesel locomotives.

The awards followed an open and public tender process overseen by the board of directors, Molefe said.

It had a stringent local content, skills development, and training commitments as dictated by the supplier development programme.

All the locomotives except 70 would be built at Transnet Engineering's plants in Koedoespoort in Pretoria and Durban, to drive the country's regional integration objectives.

Transnet Engineering is the company's engineering, manufacturing and rolling stock maintenance division.

Molefe said: "Transnet Engineering's role in the agreement has been defined to ensure that it transforms into an equipment manufacturer over time. It will share approximately 16 percent of the total build programme."

In terms of the agreements, the last locomotive will roll off the production line within three and a half years.

"In other words, at the programme's peak, we will be producing 480 locomotives per year at 48 per month," he said.

Molefe said more than one bidder was appointed to be able to deliver deadlines.

"The ability to stick to an extremely tight delivery schedule was one of the key considerations in assessment of the bids. It is our view that no single supplier would have the capacity or resources to deliver within the timelines we had envisaged."


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