Since 2014, South Africa’s largest transport company – Transnet – was meant to receive more than 200 diesel locomotives worth billions from a Chinese supplier that never delivered them.
This came to light in Transport Minister Barbara Creecy’s parliamentary response to MK Party MP Adil Nchabeleng’s questions concerning the dispute between the supplier and Transnet.
The supplier, CNR Rolling Stock South Africa, now known as China Railway Rolling Stock Corporation (CRRC SA Rolling Stock), is the South African subsidiary of Chinese manufacturer CRRC.
According to the minister, in March 2014, Transnet and CNR Rolling Stock South Africa concluded a Locomotive Supply Agreement for the design, manufacture, test and supply of 232 diesel locomotives.
To date, the supplier has delivered only 22, or 9.5%, of the 232 diesel locomotives under the agreement, prompting Transnet to initiate legal proceedings against CRRC SA Rolling Stock.
Nchabeleng asked the minister about the relationship between CRRC and Transnet, including the existing joint projects and financial, technical, and operational commitments of each party.
In her response, Minister Creecy noted that currently no joint projects exist between the supplier and Transnet as a result of the non-delivery of more than 200 locomotives.
“Given the serious irregularities identified in the review application, Transnet has not pursued any joint projects,” she explained.
Creecy further explained that the review application identified significant irregularities in the procurement and contracting of the Locomotive Supply Agreement with CNR Rolling Stock South Africa.
She added that the supplier, CRRC SA Rolling Stock, has opposed the review application, and that Transnet’s attempts at settling with the Chinese rolling stock and train manufacturer have been unsuccessful.
This has forced the state-owned enterprise to investigate and initiate High Court proceedings against CRRC SA Rolling Stock.
An ongoing legal battle
In his questions to the minister, Nchabeleng sought further clarity surrounding the current outstanding issues in the dispute between the CRRC and Transnet.
The MP questioned which contractual, financial and performance-related disagreements remain unresolved, as well as the steps by both parties to address the disputes.
Minister Creecy explained that in 2014 and 2015, Transnet made advance payments to CRRC SA Rolling Stock for the delivery of the locomotives.
“Transnet is currently owed R1,350,563,130 (R1.35 billion) by CRRC SA Rolling Stock in respect of advance payments made where there was no associated delivery of locomotives,” she clarified.
Regarding steps taken, the minister explained that Transnet and the Special Investigating Unit (SIU) jointly instituted an application in the Gauteng Division of the High Court of South Africa on 9 March 2021.
This was done to review and set aside the CNR Locomotive Supply Agreement, amongst other relief, due to the continued lack of engagement with CRRC SA Rolling Stock.
“The lack of engagement with CRRC SA Rolling Stock is justified given the litigation between Transnet and the SIU and the failure to settle the issues with CRRC SA Rolling Stock,” she said
“Transnet is protecting its rights through the litigation it has instituted in the High Court.”
Despite the ongoing dispute with CRRC SA Rolling Stock, Transnet’s operations continue, and new trains are being added to South Africa’s rail network all the time.
The Passenger Rail Agency of South Africa (Prasa) has taken delivery of more than 268 refurbished yellow train coaches to be deployed onto the rail network at any time.
The rail agency has also recovered all but five of its priority rail lines and is well on track to fully restore its network, with an eye on 600 million passenger trips by 2030/31.
Loading ...