International rail equipment manufacturer Bombardier Transportation reports that its tender to supply metro coaches to the State-owned Passenger Rail Agency of South Africa (Prasa) embraces full localisation from day one – a commitment premised on an immediate ramp-up of local manufacturing, engineering and servicing rather than a phased approach involving initial importation.

During a visit to South Africa, global president for services Laurent Troger indicated that the group had already deployed similar immediate localisation templates in countries such as India and Brazil and that it was confident the model could be replicated in South Africa.

Bombardier Transportation is one of seven companies vying for the multibillion-rand, multi-decade Prasa contract, which could involve an investment of up to R123-billion and the purchase of up to 7 200 new metro coaches by 2035.

The other bidders for the first phase of the project are CAF, of Spain; China South Rail (CSR), of China; China North Rail; Gibela Rail Transportation (a French consortium comprising Alstom and Actom); Dudula Rail (a consortium comprising ABB South Africa and Stadler, of Switzerland); and the CSR/Wictra consortium.

The National Treasury has set a R40-billion affordability limit for the fist phase, but this could still involve the supply of more than 300 metro coaches a year over a sustained period.

Troger says the scale of the project is more than sufficient to support the investment needed for full localisation. He points out that a similar project for the Delhi Metro Rail Corporation led to Bombardier investing €33-million in the development of a plant in Savli, Gujarat, for the local production of rail car bodies and bogies. The facility was operational within 18 months.

Chief country representative Aubrey Lekwane reports that the group, which is the supplier of trains to the Gautrain project, has already canvassed over 200 local suppliers to assess their ability to be integrated into the Bombardier supply chain for South Africa and the rest of the region.

The group is also comfortable with the stipulation that Transnet Rail Engineering (TRE) be used as the conduit for the envisaged technology transfer and manufacturing. It has not yet settled, however, on a workshop site, saying it will do so in consultation with Prasa and TRE should its bid prevail.

Troger is also sanguine about Prasa’s decision to decouple the broad-based black economic–empowerment (BBBEE) component from the main equipment tender, saying this arrangement can be accommodated without difficulty into the special purpose vehicle that will have to be created for the project.

Under the terms of the Prasa tender, the winning rolling-stock supplier will hold 70% of the project delivery company, with the BBBEE equity participants holding the 30% balance. The BBBEE partners will be subject to a three-year lock-in period.

The utility, which operates the Metrorail commuter network, expects to announce a preferred equipment bidder before year-end, a preferred BBBEE bidder early in 2013 and to take delivery of the first new trains in either late 2014, or early 2015.

Sales director for the UK, Ireland and South Africa Noel Travers acknowledges that the timeframes are tight, particularly for the full localisation model being proposed.

However, Bombardier Transportation has already invested “tens of millions” to position itself to deliver on the commitment and to ensure that any South African-made units will be cost competitive and delivered to the group’s exacting quality standards.