Transnet is executing plans to upgrade the locomotives on its troubled coal export line, which has been saddled with ageing rolling stock since its relationship with original equipment manufacturers soured over illegal, Gupta-linked tenders.
Mandisa Mondi, GM for coal at Transnet Freight Rail (TFR), said the parastatal had dragged a handful of original equipment manufacturers to court over the matter and as a result some “are not producing locomotives for us, and indeed they are holding back on some of the components that we need to keep our locomotives in motion”, Mondi told delegates at the Coal Industry Day this week.
Transnet, together with the Special Investigating Unit (SIU), has asked the high court to overturn R54.4bn worth of contracts for the acquisitions of 1,064 locomotives. The procurement event, one of the largest ever undertaken by a state-owned company, resulted in the awarding of the irregular and illegal contracts in 2014 when the organisation was headed by CEO Brian Molefe and CFO Anoj Singh, known associates of the Gupta family that went on to facilitate state capture at power utility Eskom.
The Gupta brothers are friends of former president Jacob Zuma and business partners of his son Duduzane. They are alleged to have used this relationship to score billions of rand in tenders and contracts and wielded so much power they thought to have been actively involved in the appointment and dismissal of ministers and senior staff at state-owned enterprises.
The contracts were awarded to four original equipment manufacturers: General Electric (GE), Bombardier Transportation, China South Rail and China North Rail, which has since merged to become the Chinese Railway Rolling Stock Corporation (CRRC).
It was the CRRC entities in particular that were found to have facilitated billions in kickbacks to Gupta-linked businesses. Transnet and the SIU have contended that GE and Bombardier must have known the contracts were irregular.
Mondi conceded the coal export line has also been affected by the legal dispute.
The line, which moves coal from Mpumalanga to the Richards Bay Coal Terminal, has been beset with problems this year, including three derailments in the past three months. The operational issues, which include rampant cable theft, have unfortunately coincided with a boom in export coal prices, much to the frustration of SA miners seeking to take full advantage of 13-year price highs.
Mondi said CRRC was an original equipment manufacturer that had been lined up to supply the coal export line with locomotives so the old fleet could be retired. But in light of the legal dispute, and “with them pulling out and not supplying those locomotives, it meant that we needed to work with the B fleet, which is quite old”, she said.
TFR said it uses jumbo heavy haul export coal trains, which are serviced by specialised resources fitted with technologies that are unique to heavy haul trains and so are not interchangeable with the rest of TFR’s general freight business, which, as a result, has prevented TFR from moving locomotives from other corridors to service the coal line.
“However, the solution we have found is we’ve identified a different fleet of locomotives that we’re going to fit with technology unique to the coal line and deploy it onto the line,” Mondi said, adding that the tender for the technology closed on July 24 and there is an eight-week lead time before the first kits will be available. The fitment of the technology is built into Transnet’s strategy for the next quarter.
Mondi said Transnet had brought on a new chief procurement officer and a team of advisers in a bid to transform the organisation’s sketchy procurement environment into one where good governance is upheld.
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