Transet's locomotive deal way off schedule

The contract perplexed the local rail industry when it was awarded last October - and reported in Business Day at the time - especially as Transnet overlooked established European train companies, saying the Chinese had agreed to "a tight delivery schedule".

China South Rail (CSR) is hoping to win a much bigger Transnet contract to supply 599 electric locomotives and 465 diesel ones in a deal worth about R35bn.

CSR's Zhuzhou Electric Locomotive Company let slip on Thursday (4 July) that it would not be able to deliver the locomotives until possibly June next year, despite the two parties having agreed on a December delivery date. The 95-locomotive contract was awarded to CSR even though the company did not have a locomotive with the required configuration.

In fact, it appears the locomotive does not yet exist, with the prototype for the dual electric locomotive contract still months away from completion. Among the losing bidders were China North Rail, Bombardier, Siemens and EMD.

Dismissed concerns

At the time, Transnet's chief executive Brian Molefe dismissed concerns about the absence of the locomotive from CSR's portfolio. He said CSR manufactured locomotives that exceeded the design requirements of the locomotive sought by Transnet under the tender and it would only be a matter of adjusting the engineering of an existing locomotive design.

The deal is the subject of a probe by Public Protector Thuli Madonsela, who decided to investigate after she received a request from the Cape Town-based Workers International Vanguard League.

The league said it wanted Madonsela to investigate "because CSR was awarded a deal in Namibia (worth R260m) for 22 locomotives, which were so fault-prone that they had to be withdrawn from service within weeks of being delivered".

Workers International Vanguard League secretary Shaheed Mahomed said on Thursday (4 July) that he was asked to submit an affidavit to the public protector to back his claim. Mahomed said there had been no update on the progress of the investigation and it appeared there was "foot-dragging".

Unaware of delays

On Thursday (4 July), Transnet Freight Rail itself appeared unaware of the delays, with its chief executive Siyabonga Gama saying the programme had been pushed out to January to accommodate the year-end slowdown in South Africa and the Chinese new year.

"The delivery of (the) first 10 locomotives to be made in China is due in early January next year. It does not change the commissioning date of March as locomotives must be tested before acceptance," Gama said.

"Indications are that we will receive the first 10 locomotives by December but we allowed a further month for unforeseen delays. In terms of the schedule, the prototype will be ready in September. All locomotives will be delivered on time during 2014 and early 2015."

But Ying Yang, chief expert and deputy chief engineer in charge of the prototype design and assembly in China, said the first two prototype locomotives would be shipped to South Africa in December. After that, performance tests would begin, which could last three months or more, depending on the results.

"After tests we may have modifications (and then) batch production will follow," Yang said.

"Maybe (we will) have some failures and we will have to modify the train. The first 10 will be shipped three to six months after the first prototypes," he added.

The locomotive contract was signed on the basis of South Africa's commitment to doing business with Brics partner countries. In March, Transnet said it had signed a "groundbreaking" financing agreement with the China Development Bank, reportedly worth US$5bn and it linked the funding with a deepening of relations with China after the award of the contract to CSR.

CSR Zhuzhou president Xu Zongxiang said at the signing ceremony the company had a prototype running on its test track in China.

Two weeks ago, however, Yang said that work had still not been completed on the designs for the prototype. There has been speculation that CSR threw everything at this tender, promising early delivery, local assembly, empowerment and a low price in order to gain an important foothold in the South African market. Transnet Freight Rail has one of the largest locomotive acquisition programmes in the world.

A source at Transnet recently voiced concerns within the organisation over the slow pace of progress being made on the 95-locomotive contract.

Source: Business Day via I-Net Bridge