Prasa's chief executive Lucky Montana said the board will examine the contract with Gibela Rail Transportation consortium selected as the preferred bidder for the design, manufacture and maintenance of the new fleet of 3,600 coaches which will be delivered over the next 10 years.
French transport group Alstom and local engineering firm Actom make up the Gibela consortium.
Transport Minister Dipuo Peters is expected to announce the successful broad-based BEE participants in the deal on Saturday (3 August). The structure of the empowerment transaction was broken down into 10% for active participants in the rail engineering sector, 7% for passive investors, 10% for a trust for Prasa employees and 3% for an education trust.
Montana said, together with the black participants in Gibela, the total empowerment share of the R51bn contract was 41%.
Montana said Prasa would be approaching the Treasury for the R11bn in funding that is needed for the contract. The Treasury originally committed an upfront R40bn prior to the tender process, on the understanding that it would provide the balance should the cost turn out to be higher.
The government would have to commit to the extra R11bn next month so that the final contract with the Gibela consortium could be signed in September.
Montana told the National Council of Provinces' select committee on public services that a clause would be added to the contract with Gibela to give it the option to import the first 240 coaches - worth about R2.4bn. That would be if its local East Rand manufacturing facility was not able to produce them by the fourth quarter of 2015 when a number of old trains in Prasa's existing fleet would be retired from service.
the importation was a contingency measure to ensure that there was no dip in service in 2015 should the local production fall behind schedule.
Alstom could use its existing factory in Brazil to produce the imported coaches, if necessary. Gibela has committed itself to a local content of 69% by year two of then 10-year programme.
Prasa's selection of empowerment partners for the consortium drew some criticism as the government was seen to be foisting BEE partners on the winning bidders.
But Montana said this approach ensured that the black economic empowerment component of the deal was broad-based and involved active investors who were existing participants in the railways sector. The successful empowerment companies did not have links with the ruling African National Congress.
"Prasa worked with the Treasury, the National Empowerment Fund and the Department of Transport in selecting the empowerment partners,"Montana said.
"The process was open, competitive, clean, rigorous, professional and scrutinised by auditing firm Gobodo," he added.
Source: Business Day via I-Net Bridge
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