Transnet will be issuing an open, competitive tender, inviting all eligible Original Equipment Manufacturers (OEMs) to step in to rehabilitate the non-operational Chinese locomotives that the parastatal controversially procured several years ago.
Transnet made the announcement on Thursday after it reached an impasse with CRRC E-Loco Supply, which allegedly showed unwillingness to engage with authorities in South Africa to normalise its operations in the country.
“As a matter of urgency, in the next few weeks Transnet will therefore be issuing an open, competitive tender inviting any eligible Original Equipment Manufacturers to step in to rehabilitate the non-operational Chinese locomotives,” Transnet spokesperson Ayanda Shezi said.
“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), which account for roughly 50% of Transnet Freight Rail’s revenue, and support three primary mining sector segments, namely export coal, chrome, and manganese,” Shezi said.
Transnet concluded a Definitive Settlement Agreement with CRRC E-Loco (CRRC) on November 25, 2022 following an earlier “in-principle agreement” in August 2022.
A key contingent requirement introduced by CRRC at the time of the In-Principle Agreement and also included in the Definitive Settlement Agreement was 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 Settlement Agreement.
“As independent organs of state, both Sars and the SARB are required to follow statutory prescript in considering applications by CRRC to normalise its operations in South Africa. Transnet respects the independence and processes of these organs of State,” Shezi said.
She added that the Definitive Settlement Agreement aimed to enable the rehabilitation of 161 non-operational 22E locomotives, the provision of long-term material and reliability support for Transnet, the repayment to Transnet of unjustified profits made 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.
“In addition, Transnet will, on January 13, issue a confined tender to the other existing OEMs for the repairs of the other long-standing locomotives, which came from Wabtech, Mitsui and Alstom. The resolution of this matter is key in supporting Transnet’s efforts to normalise its operations, enhancing the service provided to customers, and boosting the national fiscus,” Shezi said.
