Gordhan to visit China to resolve locomotive impasse

Wednesday, March 29, 2023

Public Enterprises Minister Pravin Gordhan is expected to lead a delegation to China next month to meet with his Chinese counterparts in a bid to resolve the impasse between Transnet and controversial locomotives company CRRC E-Loco Supply.

Tensions between the two companies dates back to 2019 when Transnet moved to halt contracts with several original equipment manufacturers (OEMS), including CRRC, worth some R54.4 billion for the procurement of 1064 locomotives between 2011 and 2014.

The contracts were highlighted to have been irregular and illegal during the State Capture Commission.

Since then, Transnet, together with the Special Investigating Unit, have entered into litigation with CRRC and the company has not provided rehabilitation for at least 161 locomotives which are currently non-operational and have caused revenue losses for Transnet.

This despite reaching an agreement with South Africa’s state owned company to do so in December last year which would enable the “rehabilitation of non-operational 22E locomotives [and provide] long-term material and reliability support to Transnet”.

In a statement, Transnet explained the importance – not only to the company but to the economy – of resolving the impasse.

“The intervention by the Minister follows the impasse between the two [State Owned Companies] earlier this year, and a meeting held with the President of the Republic of South Africa, His Excellency President Cyril Ramaphosa, on Tuesday…during which the declining performance of the freight rail division was raised sharply as a key challenge and a constraint to the performance of the economy.

“The CRRC locomotives directly impact the performance of three key railway corridors…North, North East and Cape corridors. These corridors account for approximately 50% of Transnet Freight Rail’s revenue and support three mining sector segments: export coal, chrome and manganese,” Transnet said.

Transnet said that furthermore, CRRC E-Loco Supply must also normalise its relationships with the South African Reserve Bank (SARD) and the South African Revenue Service (SARS) in order for it to continue doing business in South Africa.

“Up to now, the Chinese OEM has declined to do so.

“Minister Gordhan remains hopeful that talks with his Chinese counterparts will yield positive results in the interests of both SOCs and relations between the two countries,” Transnet said. – SAnews.gov.za