Fin24

Prasa ready for roll-out

2012-12-02 15:07

Johannesburg - In two weeks’ time, the Passenger Rail Agency of SA (Prasa) will set the ball rolling for the transfer of R37bn into the hands of black South Africans.

Prasa chief executive Lucky Montana, the architect of South Africa’s modernisation of passenger rail transportation, has left no stone unturned to ensure that South Africa’s largest black economic empowerment (BEE) deal is also the most broad-based.

“Historically, you would find that individuals who have access to money fly to Germany or China to strike a deal. We have avoided this by making it broad-based. What we have done with this deal is to recognise workers,” Montana told City Press.

Prasa will acquire 7 224 new train coaches from a foreign rolling stock manufacturer at a cost of R123bn over 20 years.

The first phase of the project will see the passenger rail parastatal buy half of these coaches at a cost of R40bn over 10 years.

Over 20 years, black investors will receive about 30% of the project’s R123bn value. They will thus benefit to the tune of R37bn.

The rolling stock manufacturer will receive 70% of the R123bn.

In January, Prasa will announce BEE partners for the project while the winning train builder will be announced on December 12.

According to Montana, 145 black-owned companies have expressed interest in participating in the 30% stake, which will be funded by the National Empowerment Fund (NEF). Seven international bidders are vying to build the trains.

In ensuring the project is as broad-based as possible, Prasa has given 10% of the BEE stake to workers from Prasa and the rolling stock manufacturer; 10% to black enterprises operating in the railway industry; 7% to individual black investors; and 3% to an education trust.

Mzi Dayimani, general counsel at the NEF, said a project company had been formed and the NEF would initially warehouse the 30% on behalf of the black investors.

Dayimani said he was happy the BEE deal was biased towards workers and the education trust in terms of ownership structure, which was never the case in old BEE transactions.

He is hoping other parastatals, such as power supplier Eskom, and transport and logistics utility Transnet, will take note as they are the principal drivers of government’s R3.2 trillion infrastructure investment programme until 2020.

Unlike old BEE transactions, black investors will benefit early in the cycle of the project instead of after 10 years or sometimes even longer.

Dayimani said proceeds from the project would be used to pay off debt for the BEE stake, but there would be a portion that would go into the pockets of black investors. However, they would not be allowed to sell their shares for up to three years.

“There will be some financial benefit that will accrue in the initial stages of the project . . . We will try to shorten the funding term,” he said.

Since 1994, roughly R600bn worth of BEE deals have been concluded, but only a few politically connected people have benefited.

Many black investors in BEE have got their fingers burnt by the economic downturn and by borrowing at unsustainable interest rates.

Montana said he wanted to use the project to help the country revitalise the struggling South African rail industry by improving skills and capacity, instead of pandering to the whims of a politically connected business elite.

He said he had ensured that the tender process had been independent and free from lobbying by powerful economic interests.

He revealed that seven transaction advisers - including big accounting and legal firms, as well as commercial banks - gave advice to the Prasa bid committee.

“If you think you can influence Lucky Montana alone, you will not succeed. I don’t have power over this . . . The power is elsewhere,” said Montana.

The Black Business Council, which initially had misgivings about the tender, is now supportive of the project and how it will help empower black people in the railway industry.

“We are very happy . . . Black firms must be involved in the manufacturing of wheels, brakes and upholstery for the trains,” said Black Business Council chief executive Xolani Qubeka.


Comments
  • fussed.anderson - 2012-12-02 15:25

    Name all stake holders involved????????? TRUTH please

      francois.smith.7 - 2012-12-02 16:28

      Do they get the R 37 bil or do they need to do something for it? If they need to do something for it, they will not benefit to the tune of R37 bil, they should benefit only to the tune or the margin of R 37 bil's contracts and the margin will probably include embezzlement and others.

  • bernpm - 2012-12-02 15:43

    If I recall correctly, a similar hype was created by Telkom when they went "public". Priority shares made available to the black population. We are still waiting for Telkom to take us to electronic highway with higher speeds at lower costs and multiple lanes. The players in Transnet and Metro rail, with all emphasis on BEE, have not yet excelled in establishing a reliable public transport system on rail. What makes this Prasa body think thy and now this Prasa body think they can. The emphasis on BEE did not do it in the past. Local production?? Remember the armsdeal promises?? The "bid advisers" ....the usual financial guys, accountants firms and experts.........they guarantee little than their own businesss to be served. We will keep an eye on the "buget" (123bn). Hope it is enough...see arms deal and toll road.

  • earthian.earthian - 2012-12-02 15:57

    "black South Africans...black economic empowerment...black investors...black-owned companies...black enterprises...individual black investors...Black Business Council...black people...Black firms...Black Business Council"... that about sums it up! Rainbow Nation???

      sibusiso.mkoko - 2012-12-02 18:33

      Yes it does sum it all up. Its our turn now. Let us be. If you can't accept it, Europe awaits you.

      david.smith.127648 - 2012-12-02 19:04

      Sibussisi go f@£! Yourself, Go back to Congo first then!

      Sibusiso - 2012-12-02 20:51

      Bizo wami!It's always interesting when they tell us about Congo and stuff!The fact is ,people from Europe arrived here ,came across us and systematically became our master!When they arrived here, our ancestors were already here.Fortunately we are still a majority in terms of numbers,there the goal of reclaiming our stolen land is a realistic possibility!

      liveby.thesword.1 - 2012-12-03 01:21

      sibusiso.....your turn for what..???wanting,wanting,wanting.....this is the reason that you will never have much in your life...always expecting others to give to you..... and to the other sibusiso....stolen land...are you aware that dingaan signed a pretty piece of paper with piet retief regarding land....you might just be on my land bitch!

  • rob.bancroft.94 - 2012-12-02 16:26

    As you say, rainbow nation, and that is after nearly 19 years! Watch this venture five years down the road. The rich will still be getting richer and the poor poorer and the whites will get the blame again.

  • bennie.vanrooyen - 2012-12-02 16:27

    Tell us in clear terms, what does it mean if you say that 10% of the BEE stake to workers. Does it mean that money intended to acquire rolling stock, will be "give away" to workers. Government employees on average already earn more than their counterparts in the private sector. Will the few white emplyees left in the parastatal also get this freebie?

  • christi.roestorff - 2012-12-02 16:32

    Do these investors share in the profit and loss? I would hate the public to have to bail out this entity should things go less than well?

  • nico.vandermerwe.54 - 2012-12-02 17:32

    China will get the coachbuilding contract. And they won't use local work force.

      DeonvanRensburg - 2012-12-03 06:08

      Actaully an Austrian company did - and the factory is in Jet Park, Boksburg. The Diesel-Electric locomotives are an entirely different story, they will just be assembled here.

  • thabo.langa.77 - 2012-12-03 05:03

    Maybe its easy for me because I am not in line to benefit, but giving people money for nothing creates a false sense of entitlement. They are merely giving the guys fish instead of teaching them to fish. Hope they advice them how to spend the money wisely.

  • andries.stucki - 2012-12-03 07:01

    The evidence is all around us in our beloved country.... Look at education, police, health services, the transport system (railways and roads), etc etc etc. Thabo.langa77 and earthian.earthian is correct in essence. I used to work for the railways in the days when it was effective and competitive, before it was "handed" to incompetent blacks. First get education where it was, re-employ the knowledge base to train existing staff with potential and get rid of useless staff ... The rest will follow!

  • jeremy002 - 2012-12-03 07:16

    Perhaps if amongst them are the guys that often trash and burn railway coaches, we may see a lot less of that sort of vandalism, if it is clearly explained to them that they would be trashing and burning their own property. I wonder..

  • tiresias.watiresias - 2012-12-03 10:49

    Let me understand:No local purchases are made, no local manufacturing takes place. Somehow the payment of commission of 30% of the purchase price to selected black companies is considered a good thing? And what about the 100% of South Africans who will now pay 30% more for the trains? Should this not be called selective impoverishment?

  • flip.koen - 2012-12-03 14:10

    Now they can burn and destroy their own property!

  • Zanoxolo Zakes - 2014-03-19 09:33

    No metter what prasa or metrorail can do the thing is that the service is very poor. The train now has stopped 4 what?!!!

  • pages:
  • 1