The R50 billion contract is hailed as South Africa’s biggest single corporate infrastructure investment.
Transnet is in the midst of a seven-year plan to expand the railways, ports and pipelines that move commodities for export by 2019. The total order of 1 064 locomotives was worth R50 billion, Transnet said in a statement.
It ordered 599 electric locomotives from China’s Zhuzhou and the South African subsidiary of Canada’s Bombardier, as well as 465 diesel trains from General Electric.
CSR Zhuzhou Electric Locomotive would supply 359 electric locomotives at a contract value of R14.6 billion, excluding hedging and escalation costs. Bombardier Transportation South Africa would supply 240 electric locomotives at a base cost of R10.4 billion.
General Electric South Africa Technologies would supply 233 diesel locomotives at a base cost of R7.1 billion and CNR Rolling Stock South Africa would supply 232 diesel locomotives for R7.8 billion.
The average base price for a single electric locomotive was estimated at R41 million, while a single diesel unit would cost R32 million.
“The multi-billion rand acquisition is South Africa’s single biggest infrastructure investment initiative by a corporate,” the firm said in a statement.
All bar 70 of the trains will be built in South Africa, Transnet CEO Brian Molefe said.
“This transaction is intended to transform the South African rail industry by growing existing small businesses and creating new ones. We are going to create and preserve approximately 30 000 jobs,” added the transport boss.
After decades of underinvestment, South Africa is scrambling to modernise its rail network, which is currently mainly used for freight.
Commenting on why the contract was split among four companies, Molefe said “no single supplier would have the capacity or resources to deliver within the timelines envisaged”.
Besides commercial, technical, black economic-empowerment, training and technology-transfer commitments, the successful original-equipment manufacturers (OEMs) had also met the Department of Trade and Industry’s 55% local-content stipulation for the diesel vehicles and the 60% threshold for the electric locomotives.
But Molefe said some suppliers could well deliver localisation spin-offs of 65% or higher and stimulate a domestic railways reindustrialisation process, while creating the platform for the transformation of Transnet Engineering into an African rail OEM.
Transnet Engineering would invest R300 million at its facilities in Pretoria and Durban to facilitate the localisation programmes, while the OEMs had been given 90 days to finalise their arrangements with local suppliers, including private domestic suppliers.
The trains will mainly be used for transportation of general cargo. Delivery of the first locomotives was expected in 15 months and the last batch three years later.