New BEE name in Transnet tender worth watching

The name Matsete Basadi, makes for a space worth watching after appearing as the black economic empowerment (BEE) partner in the Chinese led consortium which scooped the multibillion rands contract to supply Transnet with 95 electric locomotives.

The  state owned transport conglomerate announced last week a consortium led by Chinese manufacturer, CSR Zhuzhou Electric Locomotive (CSR), was the successful bidder for the supply of 95 electric locomotives to be used in Transnet Freight Rail’s General Freight Business.

The winning bidder was presented as a joint venture between CSR which has a 70% stake and Matsete Basadi which owns the remainder. An unknown name in the BEE space, Matsete Basadi was represented at the announcement by Lietsiso Mohapeloa. He said the BBBEE formation consist of Matsete Industrial Services, Basadi Dirang and a community trust called Matla Sechaba. He added that the consortium has allocated shares to an employee trust.

The CSR partnership can be seenn as the beginning of a long term partnership which has inn its site the lucrative South African rail refurbishment space. Transnet did point out that     it was set to purchase more locomotives in the medium term as part of its R300bn infratsruucture dvelopment programme. There is also the R126bn rolling stock acquisiton programme undertaken by the Passenger Rail Agency  of South Africa (PRASA). CSR has submitted a bid for the PRASA programme but is yet to announce its BEE partner.

Transnet said it has reached an agreement with the CSR consiutium that will see a lare bulk of assemling taking place locally. The agreement comes with a tight delivery schedule that will see the first batch of locomotives delivered to TFR by December 2013, while the last batch is planned to be delivered in September 2014. The parties committed to produce the majority of the locomotives locally.

The first 10 locos will be assembled in CSR’s factories in China, while the remainder will be made in South Africa in line with the agreed supplier development targets of 60,5% of the total value of the contract. In addition, the locomotives come with a 30-month warranty and a six-year warranty on the traction motors.

Public Enterprises Minister Malusi Gigaba said the award followed an open and public tender process which drew interest from leading manufacturers around the world.  The evaluation, which had three stages covered Broad Based Black Economic Empowerment and Supplier Development; technical – including details of technical offers from the potential suppliers; and commercial. The latter included pricing, total cost of ownership and contractual terms and compliance to the supply agreement.

In line with Transnet’s commitment to the Competitive Supplier Development Programme – the Department of Public Enterprises-led initiative to localise the manufacturing of imported equipment – localisation, sustainability and skills development had the highest weighting within the supplier development stage.

The purchase is part of Transnet’s long-term fleet renewal programme to increase capacity while at the same time improving the average age of its fleet. This is to deliver on the requirements of the Market Demand Strategy (MDS). In terms of the MDS, Transnet Freight Rail is expected to grow its volumes from the current 201 million tonnes per annum to over 350 million tonnes in just seven years.

The locos are configured to operate under both the 3kv DC and 25kv AC power, allowing TFR flexibility to deploy across its general freight business network. This has significant benefits for efficiency and productivity as it reduces operating cycle times by saving up to six hours traction type change overs which result from different voltage supplies.

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