South Africa awards US$4.7 billion locomotive supply contract

South Africas Transnet awards US4.7 billion locomotive supply contractCSR Zhuzhou and Bombardier won contracts for the supply of 599 electric locomotives, while GE South Africa Technologies and CNR Rolling Stock South Africa will build and supply 465 diesel locomotives. (Image source: Bombardier)South Africa’s state-owned freight transport and logistics company, Transnet, has awarded a R50bn (US$4.7bn) contract for the building of 1,064 locomotives to four global original equipment manufacturers (OEMs)

Transnet said it has awarded CSR Zhuzhou Electric Locomotive and Bombardier Transportation South Africa contracts for the supply of 599 electric locomotives, while GE South Africa Technologies and CNR Rolling Stock South Africa will build and supply 465 diesel locomotives.

The multi-billion dollar acquisition is South Africa’s single biggest infrastructure investment initiative by a corporate, Transnet said.

Brian Molefe, chief executive of Transnet Group, commented, “This marks a significant milestone in the company’s history together with substantial socio-economic benefits for South Africa.

“The drive to modernise our fleet is intended to improve reliability and availability of locomotives. This will improve customer satisfaction, ultimately leading to our crucial goal of road-to-rail migration of cargo in line with government’s objectives,” he added. 

According to Transnet, the award has stringent local content, skills development and training commitments as dictated by the Supplier Development Programme, a government initiative led by South Africa’s Ministry of Public Enterprises.

In line with the country’s commitment to boost its manufacturing capacity, the majority of the locomotives will be built at Transnet Engineering’s plants in Koedoespoort, Pretoria and Durban, driving South Africa’s regional integration objectives, Transnet said.

Transnet Engineering’s role in the agreement has been defined to ensure that it transforms into an OEM over time, sharing approximately 16 per cent of the total build programme, about a third of which will be outsourced to local emerging engineering and manufacturing firms, the company said.

In total, the localisation elements are expected to contribute more than R90 billion (US$8.3bn) to the economy, it added.

“This transaction is intended to transform the South African rail industry by growing existing small businesses and creating new ones. We are going to create and preserve approximately 30,000 jobs,” Molefe said.

The suppliers have complied with and exceeded the minimum local content criteria for rolling stock of 60 per cent for electric locomotives and 55 per cent for diesel locomotives, Transnet said.

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