GE, Bombardier Among Winners of $4.7 Billion Africa Deal

Transnet SOC Ltd., South Africa’s state-owned ports and rail operator, picked four companies to supply new locomotives as part of a $4.7 billion investment to renew its aging fleet and boost capacity.

GIBS Information Centre / GIBSIC‘s insight:

rail infrastructure – ” More than two-thirds of Transnet’s capital expenditure will be used to renew and expand the company’s freight-rail infrastructure. The new locomotives, to be deployed on the general freight lines, will cut the average fleet age to 22 years from 33 years.

Domestic Manufacturing  –   South Africa has general transportable freight of about one billion metric tons a year, including commodities, Gama said in an interview today. The unit is targeting a freight market share of 25 percent by 2022 compared with 15 percent now.

“It’s a game changer for us,” Gama said. “It is going to assist us tremendously not only in road-to-rail strategy, but also helping with building South Africa’s industrial capacity.”

To create jobs and develop expertise, South African state-owned companies in the past favored suppliers who committed to manufacturing major parts of their offerings domestically. The investment is expected to contribute over 90 billion rand to the local economy and create about 30,000 direct and indirect jobs, Molefe said.

GE, based in Fairfield, Connecticut, already built 143 locomotives for Transnet at a South African factory, according to the rail operator. The Export-Import Bank of the U.S. backed a 1.1 billion-rand loan to Transnet to pay for the engines, the company said in September. Transnet in 2012 also agreed to pay CSR Zhuzhou 2.6 billion rand for 95 locomotives.  The contract awards will help Transnet in being a supplier of locomotives to the African region, according to its CEO.

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