Transnet: Additional 43 new GE Locos and Capex to Increase

[Steve Appleton]

From Business Day, 11 January 2012. http://www.businessday.co.za/Articles/C ... ?id=162365

Transnet capital expenditure to increase ‘radically’, says Gigaba
Public Enterprise Minister Malusi Gigaba has expressed his frustration over the slow pace of investment into new freight rail infrastructure in South Africa

KARL GERNETZKY
Published: 2012/01/11 04:36:02 PM

An announcement of a "radical increase" in the capital expenditure of Transnet, the state-owned freight and logistics company, will be made in the near future, Public Enterprise Minister Malusi Gigaba said on Tuesday. Speaking at the signing of a deal to purchase an additional 43 diesel-electric locomotives from General Electric South Africa Technologies, the local arm of US industrial group General Electric (GE), Mr Gigaba said the increase would not only be "handsome", but "beautiful" too.

Mr Gigaba has expressed his frustration over the slow pace of investment into new infrastructure and mooted the prospect that Transnet’s R110bn, five-year capital expenditure programme could be doubled or even trebled. He has said Transnet, Eskom and the Industrial Development Corporation are working together to find new ways of borrowing more money, over a shorter period of time, without providing details on how this additional capital would be raised.

The additional 43 locomotives follows the purchase of 100 locomotives by Transnet in February last year, of which 90 are to be assembled in South Africa. Brian Molefe, CEO of the Transnet group, said the 143 new locomotives were a key element of the capital expenditure programme. "The average age of our assets is crucial in our efforts to improve our reliability, efficiency and our ultimate goal of running a scheduled railway," he said. Increasing the volume of the Transnet freight rail service depended significantly on the procurement of locomotives in the short term, "and this project achieves exactly this", Mr Molefe said.

Jay Ireland, CEO and president of GE Transportation Africa, said the locomotives were the first of their kind in the country and offered state-of-the-art fuel efficiency and reduced emissions.

GE’s contract had to fulfil the stringent local procurement demands of the government-mandated Competitive Supplier Development Programme (CSDP) which aims to improve South Africa’s industrial capacity and competitiveness through skills and technology transfer. The negotiated CSDP value of the 43 locomotives was 65.15% of the total contract value, an increase from the CSDP value of 54.2% of the initial contract for the 100 locomotives, said Mr Molefe.

Donald Gips, the US ambassador to South Africa, said the two contracts were a model for US companies seeking to enter sub-Saharan Africa and South Africa. "The US could benefit from Africa’s success," he said, adding that reducing barriers to regional trade by improving rail infrastructures was one way of hastening that process.

With NICKY SMITH

[Aidan McCarthy]

Weren't the 43 class diesel built by GM?

[Steve Appleton]

Aidan, No they are GE C30ACi locos.