China South Rail contract for 100 locomotives was 'flawed', inquiry hears | Fin24

China South Rail contract for 100 locomotives was 'flawed', inquiry hears

May 20 2019 10:33
Lameez Omarjee, Fin24

The procurement of 100 locomotives from China South Rail was flawed and resulted in excessive costs to Transnet, the state capture inquiry heard.

Francis Callard a former electrical engineer at the state-run freight rail agency on Monday continued his testimony before the state capture commission of inquiry. This is his second day before the inquiry. On Friday he presented evidence to the commission on a contract for 100 locomotives which was awarded to China South Rail in 2014.

The commission, chaired by Deputy Chief Justice Raymond Zondo is investigating allegations of corruption and mismanagement at several state entities including Eskom, and Bosasa.

On Monday morning, Callard wrapped up his testimony on the 100 locomotives, which reportedly cost Transnet R509m more than it should have.

He previously told the commission that documents drawn up to lay out the business case for the 100 locomotives were altered to ensure that ultimately a tender would be switched from Mitsui & Co of Japan (MAS) to CSR instead, and that upfront payments for the locomotives were excessive, Fin24 previously reported.

"The impact of the change from MAS to CSR and associated design changes on locomotive delivery were never discussed with technical or operations and was equally irresponsible," Callard said of the contract.

"The confinement to CSR was flawed in concept and execution in my considered opinion. The motivation to use CSR was based on the production capacity of China and a supplier who at the time of the award had yet to deliver working locomotives. It did not mean confinement requirements," Callard added.

"The increase in estimated costs from R3.871bn to R4.84bn for the acquisition of 100 locomotives was unjustified and the upfront payments amounting to 60% before the first locomotive delivered was excessive," he reiterated.

The inquiry continues.



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