Prasa awaits Treasury decision on R11bn funding

CAPE TOWN — The Passenger Rail Agency of SA (Prasa) is expecting an announcement from the Treasury next week on the R11bn contribution by the state to its R51bn rail contract with the Gibela Rail Transportation consortium.

The consortium won the contract to provide 3,600 coaches for 600 trains for Metrorail over the next 10 years.

This is the first phase of the R136bn revitalisation of rail passenger transport in SA over the next 20 years, of which R123bn has been earmarked for the acquisition of 7,224 coaches so that the entire fleet is replaced.

Provision for the R11bn — at a rate of about R1.1bn over 10 years — is expected to be made in the medium term budget policy statement, to be presented by Finance Minister Pravin Gordhan next Wednesday. Prasa CEO Lucky Montana said in an interview yesterday that the commercial terms of the contract were signed on Monday and the financing of the contract would be closed once the Treasury had finalised its work.

The Treasury’s fiscal liability had been considering the funding, Mr Montana said. There was no question over the number of coaches to be ordered or the amount to be paid, he said, but only about cash flow. Prasa had submitted its schedules to the Treasury.

Mr Montana said the Treasury had already committed R4bn to Prasa for its rail revitalisation programme.

Mr Montana defended vigorously the foreign element of the contract on the grounds that SA did not have the required technology. “We wanted proven capability. SA no longer has the capability to design a complete modern train,” he said.

He insisted that eventually all 600 trains — except for the initial 20 — would be manufactured in SA from 2015 when the facility was ready. Mr Montana defended Prasa’s contract with Spanish company Vossloh for 88 hybrid diesel locomotives for R3.5bn, or $4.2m each. The locomotives would be assembled and maintained in SA.