Transnet will issue a tender for new locomotives next month as the state-owned logistics group moves to keep on its side key customers in the mining industry, which have tallied billions of rand in lost export sales due to shortages of trains to haul their products to the ports.
In an interview with Business Day, Transnet Group CEO Portia Derby said the critical constraint faced by the state-owned entity is that it does not have locomotives to move commodities.
“We know we need to improve the investment in the infrastructure, but ... if you don’t have a locomotive, no matter what state your infrastructure is, you can’t move it,” Derby said.
Transnet will come out with the new procurement event for locomotives before end-July.
Derby’s comments were made in Abidjan, Ivory Coast, at the Africa CEO Forum last week. They come as a host of companies in the mining industry and other sectors count the cost of inefficiencies at Transnet, whose sprawling supply chain infrastructure spanning a railway network, cargo trains and ports makes it a crucial player in an economy that has hardly grown over the past 10 years.
Derby, who inherited a company described by chief justice Raymond Zondo as the primary site of state capture, also offered thinly veiled disapproval of the mining industry’s constant criticism of Transnet, which is also grappling with cable theft and vandalism.
“The thing that we have been sitting on and weighing up is ‘what is the point of responding to them every time when they go to the press?’ Because that’s about them.
“We understand exactly the situation we are in and they know exactly what it is we are doing to provide redress, as far at least as the locos [locomotives] are concerned,” she said.
Transnet’s woes are partly the result of what critics have described as the disastrous stewardship of the economy under Jacob Zuma, with industrial-scale corruption siphoning off billions of rand through overpriced tenders.
The company, which also operates ports and container terminals, has suspended contracts worth more than R50bn to supply 1,064 diesel and electric locomotives on grounds that they were awarded on flawed commercial strategy, and that Treasury instructions were deliberately ignored.
Derby, who has been at the helm for just over two years, said the new tender would follow proper governance and sound commercial standards and procedures. “Bearing in mind that we have already had a procurement locomotive event that went wrong, we all want to be absolutely careful that the economics are right, the numbers, the business cases are right. That we follow the appropriate governance to get to the decision to process,” she said.
Roger Baxter, CEO of Minerals Council SA, told Business Day on Monday that the industry, which missed out on about R35bn in 2021 from contracted coal, iron ore and chrome volumes that could not reach ports, would welcome any workable solution that Transnet procured. The council and its members are looking for an opportunity to collaborate.
“We are not pointing fingers or anything like that, we are looking at ... what the solutions could be to make sure that we can get ourselves back to target this year because we are fairly behind schedule on all the major bulk commodities,” Baxter said.
He did not have the specific details of what Transnet is proposing, “but obviously we will look at the different issues and from our side, it is all about partnerships to improve performance and that’s all our focus is at the moment.”
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