PRASA trust little knowns into a game of billions

There were  tears, smiles and ululations yesterday in Pretoria as three low profiled enterprises entered a game of billions via the Passenger Rail Agency of South Africa (PRASA).

PRASA released yesterday the long awaited list of preferred broad based black economic empowerment (BBBEE) participants in the R51bn rolling stock renewal program. Weighted heavily towards black women empowerment, the announcement may pass as one of the most important chapters in South Africa’s economic redistribution poser, BBBEE. PRASA appears to have stretched its mind in this BBBEE arrangement. Indeed PRASA did caution other players to watch and learn from its formula with CEO Lucky Montana saying it was a rigorous, competitive and transparent BBBEE arrangement.

The lucky PRASA list featured Khiphunyawo Rail, Community Rail Services and Elgin-Identity Rail Corporation who are to share about 17% in PRASA’s R52bn renewal project. These names will not ring a bell because they are fresh titles representing a collection of relatively unknown enterprises except for one or two names like Sonja De Bruyn Sebotsa and the Disability Empowerment Concerns Trust. The three groups form part of a BBBEE list that also includes a PRASA employee trust and an educational trust. The latter two were allocated 10% and 3% respectively.PRASA BBBEE Partners

In coming with this list PRASA said it was primarily guided by three ambitions.  “PRASA sought to procure the following entities: black enterprises currently involved in the rail sector; black enterprises wishing to enter the rail sector (new entrants); investor black enterprises.  PRASA said these goals were fulfilled as follows:

  • One black enterprises currently involved in the rail sector comes in form of Khiphunyawo Rail, comprised of SA Freight Logistics and Autism South Africa, among others.
    • One new entrant is Community Rail Services, which is comprised of a number of people with disabilities, black female youth, Parmtro Investments and Kaelo Investments.
    • One investor black enterprise is the Elgin-Identity Rail Corporation, comprised of Elgin Engineering, Identity Capital Partners and Disability Empowerment Concerns Trust.

The highflying businesswoman Sebotsa comes through Identity Capital Partners a company she started from scratch after she quit prominent and women focused BBBEE investment group WDB Group. Even Sebotsa was overwhelmed by the selection. “When we woke this morning we did not know that this day was going to change our lives. This is such an important milestone for us,” she said.

PRASA said the selection process created an opportunity for the chosen entities to participate in the equity of the Project Company who, but for this process, would not have had the opportunity to participate. The job at hand is massive. It is centered on delivery of about 3600 vehicles delivered over a 10 year period 2015 to 2025. There is also maintenance, spares supply and technical support on vehicles over 18 year period 2015 to 2033. PRASA appointed the Gibela Consortium which is made of Alstom and Actom to be the main driver of the project. In appointing Gibela Consortium in December last year, PRASA shelved 30% equity in the project for BBBEE partners, the once it announced yesterday.

Montana said PRASA chose this unusual path to ensure maximization of BBBEE benefits in its massive infrastructure development program. His view was echoed by the minister of transport Dipuo Peters.  “This presents an opportunity to all successful bidders to gear themselves up for the realization of the intended outcomes of the Rolling Stock Fleet Renewal Programme,” said Peters. PRASA is of the view that the selected B-BBEE entities together with the 3 trusts, create broader participation, which is one of the objectives of PRASA in the Programme. The creation of job opportunities, local content, skills development and community upliftment remain the essential ingredients in the success of any procurement process of this magnitude. As Government, we take it upon ourselves to ensure that partnership with the private sector and other stakeholders are forged to ensure the fruition of these commitments”.

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