Transnet fined for refurbished coaches

TRANSNET Engineering was made to pay penalties for the late delivery and questionable quality in a contract to refurbish hundreds of coaches for the Passenger Rail Agency of SA (Prasa).

This emerged yesterday after Prasa said Transnet was behind an accusation levelled by the Democratic Alliance (DA) that it violated preferential procurement rules.

Prasa CEO Lucky Montana said the agency slapped Transnet with penalties on the refurbishment contract. He said its internal evaluation also found that Transnet had priced them way above market value.

Transnet admitted to using a problematic sealant, which led to water leaks into trains in Cape Town, Mr Montana said. And it failed to deliver the required number of refurbished coaches by the end of the financial year.

Mr Montana spoke to Business Day on the sidelines of the SA-France Business Forum yesterday.

Mr Montana said Transnet was the source of false perceptions that it had broken the Treasury’s procurement guidelines.

He accused the DA of “succumbing to a lobby clique within Transnet and (transport trade) unions”. Their objective was to pressure Prasa into using Transnet Engineering for the provision of new locomotives.

However, “we know that Transnet Engineering does not have the capacity to do so,” he said.

The spat began at the weekend, when DA transport spokesman Ian Ollis said he would ask the auditorgeneral to investigate Prasa.

Yesterday, the DA accused Prasa of favouring German manufacturer Vossloh in the supplier of airconditioning systems for its Shosholoza Meyl fleet.

It said Prasa may have violated procurement rules on rolling stock, which stipulate that 60% of heating, ventilation and air-conditioning systems must be locally produced for contracts of less than five years.

The DA leaked a letter signed by Prasa’s head of engineering services, Daniel Mtimkulu, in March, confirming its intention for long-term cooperation with Vossloh.

At the weekend, the DA said Prasa awarded a R3.5bn tender to a firm that would import locomotives from Spain. But it said Transnet Engineering had the capacity to produce them in SA, for half the price.

The contract, for the supply of 70 diesel-electric locomotives, was awarded last year to Swifambo Rail Leasing, to improve Prasa’s hauling capacity on the Shosholoza Meyl service. Swifambo ordered the locomotives from Vossloh España, the Spanish subsidiary of the Vossloh group.

Vossloh said last week that it would supply locomotives to Swifambo between March next year and the end of 2016. The contract included the option of additional locomotives and maintenance.

With a tender price of R3.5bn, the 70 locomotives would come at a cost of R50m each. The DA claimed that Transnet Engineering’s going rate was R25m.

But Mr Montana said R25m was the estimated cost of a diesel locomotive. Transnet, he said, did not produce costly dual diesel-electric locomotives, which have two engines. “If Transnet believed its own engineering division had the capacity to produce locomotives, it would not have issued tenders to General Electric and China South Rail. It will take at least five years for SA to develop this capacity.”

He justified both the award of the tender to Swifambo — which he said was done in line with state guidelines — and the imported locomotives.