Transnet to issue locomotive tender in July to address crippling port and rail backlog

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Portia Derby, CEO of Transnet.
Portia Derby, CEO of Transnet.
  • Transnet has confirmed that it will procure new locomotives in July to respond to rail and port constraints that have cost industries in South Africa billions.
  • The entity said it needed to provide businesses with the capacity to carry goods and commodities if it hoped to return to form.
  • Transnet stressed that this procurement for locomotive would be conducted in accordance with the highest governance standards.

In a bid to improve on its operational performance, clear logistic backlogs, and claw itself out of its financial predicament, Transnet has confirmed that it will issue a tender for the procurement of new locomotives next month.

This comes after Transnet Group CEO Portia Derby told Business Day that the entity would issue a tender for new locomotives in a bid to boost logistics performance for the ailing mining sector.

This also comes after Transnet suffered a loss in 2021. However, in the same year, the entity managed to increase revenue by 11%, thanks to a recovery in petroleum and container volumes after the 2020 hard lockdown.

The Judicial Commission of Inquiry into State Capture, chaired by Chief Justice Raymond Zondo, also laid bare the scale at which resources were hollowed out from Transnet during instances such as the 1 064 locomotive procurement, which created a legal and governance imbroglio for the entity.

In April, the state-owned logistics company issued coal exporters with letters terminating long-term agreements based on a force majeure – a clause that frees parties from contractual obligation in the case of an extraordinary event.

Industry leaders warned that Transnet was in "free fall", that is was throttling investment and would ultimately be responsible for mines to close.

During the Mining Indaba in May, the Minerals Council of South Africa also urged the government to address rail and port constraints, which cost the sector up to R35 billion in 2021.

Transnet spokesperson Ayanda Shezi told Fin24 that the tender was indeed in the works to be issued in July. Shezi said the details would be finalised as it was an "important procurement for Transnet to address capacity constraints and improve operational performance". 

Shezi said the procurement details rested with executives, including Derby and the group's chief procurement officer Vulekadzi Nemukula, but would be made public in due course.

In her interview with Business Day, Derby said while Transnet endured much criticism from industries for its challenges, it was up to the entity to provide the capacity to move commodities as it battled with occasional cyberattacks and vandalism of infrastructure.

She assured the publication that the entity would run the tender with proper governance standards and that this would not be a repeat of the ill-fated tender misadventure that occurred under previous leadership.

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