Transnet says some of its Gupta-deal Chinese locomotives have stood idle for 6 years | Business Insider


A Cape Government Railways locomotive that was deliberately derailed during a labour dispute in the then-colony, circa 1870. (Getty)

  • Among the 160 Chinese locomotives Transnet has been unable to repair, some have been down for more than 6 years, new documents show.
  • None of the locomotives are more than 10 years old.
  • The state-owned China Railway Rolling Stock Corporation (CRRC) has refused to supply parts and information to allow their repair.
  • Transnet this week started a tender process for “alternative” ways to repair the locomotives.
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Among the locomotives the Chinese state sold South Africa – with the help of the Gupta family – some have been standing idle for more than six years, documents released by Transnet this week show.

None of the locomotives are more than 10 years old yet.

Transnet has now formally started the process of finding an alternative supplier to help fix at least 160 of those locomotives at various sites around the country, though it expects more to break down.

Transnet Freight Rail (TFR) started taking delivery of the locomotives, designated 20E, 21E and 22E, in 2013.  Some of those have not been in service for 2,337 days, Transnet says, or a little under 6.5 years.

The reasons they have been sitting idle include “derailments, accidents, incidents of vandalism”, with parts stolen in some case, and the inability to source spare parts.

The situation “led to a gradual deterioration of services that TFR offers to its freight customers as a result of a shortage of locomotives”, Transnet says dryly in its new request for proposals to sort them out.

In December, the Minerals Council South Africa called for the firing of TFR’s CEO and the group CEO of Transnet because of what it said was the dire decline Transnet has suffered under their watch.

Transnet anticipates that its new supplier may have to redesign components, or entire sub-systems, to get the locomotives running. That, it thinks, could take up to two years.

Transnet has demanded that a new supplier hand over all intellectual property related to the locomotives.

The state-owned China Railway Rolling Stock Corporation (CRRC), which sold Transnet the locomotives, has withheld both spare parts and such intellectual property from Transnet.

Transnet agreed to buy more than a thousand locomotives from the CRRC, in a deal that later evidence suggested would see billions of rands channeled to fronts for the Gupta family. At the time, the family was engineering deals and issuing instructions to state and parastatal officials with what they claimed was the authority of Jacob Zuma.

In August last year, Transnet said it had reached a deal with CRRC to help get the locomotives back into service, after a long-running dispute that included an effort by Transnet to have a South African court force the Chinese company to give it spare parts.

But that fell apart because CRRC could not reach a deal with the Reserve Bank and SA Revenue Service (SARS) around the proceeds of the deal.

After investigating the deal, SARS said the local CRRC operation owed it billions in tax because it had hugely inflated the price of the locomotives, and such profits are taxable.

CRRC insisted on the regulatory “normalising” of its local operations before it would supply the parts and intellectual property Transnet needs.

After SARS refused to return CRRC cash it had seized – and CRCC refused to budge on the parts – Transnet said it respects the independence of such state institutions, and would make an alternative plan.

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