APA-Pretoria (South Africa) Public Enterprises Minister Pravin Gordhan is due to travel to China next month to untie the knots in the stalled delivery of locomotives and spare parts following a deadlock between South Africa’s transport logistics operator Transnet and Chinese state-owned CRRC e-Loco Supply.
Transnet said the intervention by the minister followed an impasse between the two state-owned companies (SOCs) earlier this year and Tuesday’s meeting between the logistics firm and President Cyril Ramaphosa during which the declining performance of the freight rail division was raised as a key challenge.
“Minister Gordhan remains hopeful that talks with his Chinese counterparts will yield positive results in the interest of both SOCs and relations between the two countries,” the company said in a statement on Wednesday.
The two companies have been engaged in a legal battle after Transnet halted the supply of 1,064 locomotives from four original equipment suppliers, including CRRC, saying that 2014 contracts worth R54.4 billion (about US$3 billion) had been unlawfully awarded by the previous board and management.
Transnet announced in January that it had reached an impasse with CRRC E-Loco Supply following unwillingness by the Chinese firm “to engage with the relevant authorities in South Africa to normalise its operations in the country.”
This includes its refusal to conform to requirements of the South African Revenue Service and the South African Reserve Bank.
Transnet said 161 locomotives supplied by CRRC E-Loco are currently not running after the Chinese company withheld spares and maintenance support, impacting operations on Transnet’s iron ore, coal and manganese export lines which contributes half of its revenue.
It also accused the CRRC of failing to deliver 99 locomotives, which had been sold at inflated prices.
Transnet operates South Africa’s railway, ports and pipelines infrastructure.
JN/APA