Transnet’s efforts to rehabilitate its rail network suffered a blow on Thursday after the state-owned entity reached an impasse in talks with its Chinese rail equipment manufacturer.
The impasse means the rail and ports utility is unable to procure much-needed spare parts and components from China Railway Rolling Stock Corporation (CRRC) for its idling locomotives, which play a critical role in the haulage of bulk commodities such as coal and iron ore.
Transnet said CRRC was unwilling to engage with the relevant authorities in SA to normalise its operations in the country. The authorities concerned include the SA Revenue Service (Sars) and the Reserve Bank.
“As independent organs of state, both Sars and the [Bank] are required to follow statutory prescript in considering applications by CRRC to normalise its operations in SA. Transnet respects the independence and processes of these organs of state,” it said in a statement.
Four months ago, the two parties had reached a so-called in-principle agreement to resolve all legal disputes. The deal at the time allowed Transnet access to the spare parts to conduct maintenance on its fleet.
Previously, it was unable to do so because its contract with CRRC was suspended due to irregularities in the tender process, prompting CRRC to withhold the balance of the spare parts and components required for the locomotives.
As an alternative solution, Transnet said on Thursday it will in the next few weeks issue an open, competitive tender inviting eligible original equipment manufacturers to step in to rehabilitate the non-operational Chinese locomotives.
“This is a critical intervention not only for Transnet’s sustainability, but for the SA economy,” Transnet said in a statement, adding that the CRRC locomotives directly affect three major corridors (North, Northeast and Cape Cape) that account for roughly 50% of Transnet Freight Rail’s revenue.
The bulk commodities producers and the mining industry in general largely depend on Transnet rail infrastructure to move their products to clients as far afield as China, the world’s largest consumer of industrial commodities.
“The Minerals Council trusts the collaborative structures we established with Transnet’s board and management teams in December will help resolve these types of impediments to achieve targeted and, ultimately, growth of bulk mineral exports,” spokesperson Allan Seccombe said.
The council, which represents some of the big mining players in the industry, joined forces with Transnet in December to improve the performance of the rail network.
Transnet has been hampered by poor maintenance, a lack of spare parts for trains, copper cable theft and vandalism. The company was also hard hit by the floods in KwaZulu-Natal which destroyed crucial infrastructure while a strike by Transnet workers in October limited the ability of the parastatal to transport goods.
Meanwhile, The Black Business Council (BBC) on Thursday came to the defence of Transnet CEO Portia Derby after the Minerals Council SA said she should be fired.
“[BBC] is advising Minerals Council SA to desist from harassing the CEO of Transnet, who is effecting transformation in the rail sector,” CEO Kganki Matabane said.
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