The number of rail parts and products imported into SA is growing significantly, the African Rail Industry Association (Aria) and the department of trade, industry & competition (DTIC) warned on Monday, saying that figures could balloon amid tender rollouts from the rail sector.
They said the capacity of SA rail product manufacturers could be protected and expanded through the designation of certain products, in the absence of finalised laws stipulating the procurement of local goods.
DTIC director of rail transport equipment Metsa Komane told a panel discussion that imports were on a steady rise from 2019, when they totalled $1.9bn, to $2.1bn in 2023.
Komane warned that if the current trajectory continued, that number could jump to $3bn in imports by 2025.
She said while SA had no laws governing the purchase of rail transport equipment, the department and Aria were approaching the sector to try to salvage the situation, first by ensuring all stakeholders provide inputs into Transnet’s development of a localisation strategy that can be approved by its board.
“We will be maintaining our current manufacturing capability by doing this. It is very important that we preserve what we have,” Komane said.
“It looks like people, companies are importing for the purposes of maintaining the existing locomotive and passenger coaches and even to supply into the Gibela contract.”
As Transnet implements a railway turnaround plan, the group will look to go to tender for its maintenance and rejuvenation projects.
A list of a dozen parts and infrastructure including ballasts, rail joints and detonators, among others, has been proposed to be designated.
The procurement of locally made rolling stock and rail infrastructure is not yet regulated by law after the February 2022 Constitutional Court ruling in favour of Sakeliga that SA’s 2017 procurement legislation was illegal and unconstitutional.
The ruling prohibited state organs from using BEE pre-disqualification criteria, and by extension localisation criteria, in public procurement tenders, pushing the government to go back to the drawing board to amend and create new laws.
Transnet is developing a localisation strategy to maximise local procurement in upcoming contracts that would be issued in the short to medium term while SA finalises laws that regulate localisation.
Additionally, the industry’s inputs would assist Transnet when going out on tender to prioritise the specific items that are produced locally.
Komane said the same information would be used by the DTIC to designate the sector once the regulations were in place.
Aria CEO Mesela Nhlapho said encouraging the procurement of local content would promote the SA railway manufacturing and services sector while also fostering local development.
Nhlapho called for a collective effort by the sector to increase productivity of local rail infrastructure and maintenance, saying this would put SA in good standing to take advantage of the African Continental Free Trade Area.
The list has been met with mixed reactions from the industry, with some participants at the industry workshop calling for commitments to procure from local manufacturers while others lamented the absence of entities like Prasa from the conversation.
Voicing frustration over a lack of coherent and aligned trajectory of the sector, director Mabuza Shabalala of Pandrol SA, a regional supplier of rail equipment, said while the focus was on Transnet’s actions, there seemed to be a lack of consistency about what the industry should be doing in general.
“For instance, now, I think Prasa is not here and Gautrain is not here,” said Shabalala. “Again, right from the beginning you see this strategy that is not in any way aligned to the bigger picture ... there’s gonna be a lack of uniformity as to how, especially, DTIC looks into the industry if these pockets are coming in different forms.”
Devon Van Gent, from railway maintenance group Geismar SA, acknowledged that while some items had to be imported due to local unavailability, the biggest challenge facing local manufacturers was a commitment from the likes of Transnet.
“Sometimes the commitment is far and few between. And how do we prepare for local upswing if there’s no commitment?” he said. “We should have these discussions regularly, work with one another to understand what is Transnet’s demand, how can we forecast, how can we plan better.”
To ensure security for partners, Aaron Mabena of Transnet Engineering said there was a demand for local products because Transnet needed to perform routine maintenance on its assets.
This meant that local manufacturers and maintenance providers had the chance to secure agreements for a portion or the lifetime of an asset.
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