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Parliament to investigate massive Transnet locomotive tender

Sep 17 2017 16:11
Jan Cronje

Cape Town - Parliament’s trade and industry oversight committee agreed on Friday to launch an inquiry into Transnet’s controversial acquisition of 1 064 locomotives at a cost of R50bn.

The massive purchase has been dogged by questions of whether the locomotives are indeed being manufactured in South Africa, and whether a Gupta associate benefited from a kickback with one of the companies that won a tender.  

According to department of trade and industry regulations ‘rail rolling stock” is one of 21 government-designated commodities that must adhere to so-called localisation rules. 

These rules stipulate that the government, when awarding tenders, must only award tenders to companies that conform to these rules. 

DA trade and industry spokesperson Dean Macpherson said on Friday that the trade and industry oversight committee had agreed to consider the inquiry's terms of reference after Parliament returns from recess in early October. 

According to the National Assembly rulebook a committee“may monitor, investigate, enquire into and make recommendations” about state-owned enterprises. 

Localisation

Earlier in the week Trade and Industry Minister Rob Davies vowed the government would step up verification around its localisation policy.

The policy is supposed to help foster industrialisation and improve the “competitive capabilities in the South African economy” as well as creating jobs. 

Rail rolling stock which includes diesel locomotives, electric locomotives and wagons, has a minimum content threshold of 65%, according to a department of trade and industry representation to Parliament last year. 

Transnet's acquisition of 1 064 locomotives has been dogged by allegations that it did not comply to localisation directives. 

The government-owned rail company has denied it has done anything wrong.  

In a June media statement, a Transnet spokesperson said it was “confident that our procurement processes have sufficient checks and balances to guarantee integrity.  These include oversight at various governance levels,” it said. 

Where are they built?

In January Transet explained that it had split its order for the 1 064 locomotives across four firms.  

“Transnet awarded (China South Rail) CSR Zhuzhou Electric Locomotive and Bombardier Transportation South Africa contracts for the supply of 599 electric locomotives, while General Electric South
Africa Technologies and CNR Rolling Stock South Africa would build and supply 465
diesel locomotives,” it said.

The contract with China South Rail has come under the most scrutiny. 

Earlier this year research commissioned by the Trade and Industrial Policy Strategies group, found that, "to date, not one of the China South Rail locomotives has been assembled in South Africa; all have been manufactured in China." 

In addition to questions around localisation, investigative unit amaBhungane, in its first exposé in the #GuptaLeaks saga, reported that a close associate of the Gupta family and the CSR had entered into an apparent kickback agreement over the production of locomotives.

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