Date: 21/02/2011
Source: The Department of Public Enterprises
Title: SA: Gigaba: Address by the Minister of Public Enterpises, at the Transnet Locomotive handing over ceremony, Pretoria

Programme director
Distinguished guests
Ladies and gentlemen
I would like to thank the Chairperson, the Board and the Executive Management of Transnet for inviting us to this occasion.
It gives me great pleasure to be here this morning to take delivery of these locomotives, which are vital to our plans to revitalise South Africa’s rail infrastructure capacity which, as you know, has suffered from severe and debilitating disinvestment in the past, and has consequently created massive capacity constraints.
The many years of neglect of public investment in infrastructure capacity has created a very untenable situation for economic growth and development, and impacted negatively on jobs and skills development, especially those of artisans and apprentices, as well as the country’s local industrial and manufacturing capability.
Accordingly, the expansion of capacity in our rail infrastructure features prominently in the delivery agreement which the Infrastructure Cluster of Ministers have signed with President Zuma.
The contract between Transnet and General Electric to provide 100 locomotives represents part of Government’s initiatives to address these capacity constraints on our rails, and to improve efficiencies.
These locomotives, which are to be used on the coal line and general freight business of Transnet Freight Rail, are part of Transnet’s fleet renewal plan and the company’s R93,5 billion five-year capital investment programme.
It is inevitable that the upgrade of the fleet and the future expansion of the rail network will provide the necessary impetus to the growth of our economy.
It is my view that General Freight Business possesses tremendous potential that must still be optimally exploited in order to link-up South Africa’s economic hubs, and thus it is important that we should expand capacity by obtaining new locomotives and wagons.
The acquisition by Transnet of these Model C30ACi diesel locomotives represents the first AC diesel locomotives to be introduced in Sub-Saharan Africa.
I am also informed that one C30ACi diesel locomotive has four times the hauling power of the GE’s older locomotives, and consumes less fuel.
We applaud Transnet for having championed the largest Competitive Supplier Development Programme (“CSDP”) transaction to date, which is government’s effort to promote the reduction of import content of capital and associated operational expenditures, and increase the long term economic benefits for the local supplier industry.
Through the CSDP, government leverages on the procurement by state owned enterprises (SOEs) to develop or bolster local manufacturing and industrial capacity, through encouraging localisation of manufacturing, procurement from local suppliers, sustainable employment and skills development.
In terms of the current agreement between GE and Transnet, the first 10 of the 100 diesel locomotives will be built and assembled at GE facilities outside the country, while the remaining 90 will proudly be built and assembled at this Transnet Rail Engineering facility in Pretoria.
We encourage Transnet to ensure that the locomotives are not only assembled locally, but that most of the replacement parts and components are also sourced locally.
We encourage Transnet to ensure that in the medium to long-term it leverages its massive infrastructure investment to drive the localisation of its supply chain of imported manufactured goods or services to a reasonable level, whilst promoting local industries, and promoting South Africa as an off-shore site of choice for Original Equipment Manufacturers and multi-nationals.
We are also encouraged by this initiative, as an engagement of this nature between Transnet Rail Engineering, GE and other leading Original Equipment Manufacturers demonstrates the confidence that GE and others have in the skills and expertise possessed by Transnet Rail Engineering.
I am delighted to learn that in addition to the jobs created, Transnet can pledge capacity to train about 2 000 apprentices annually. We shall ensure that this opportunity is fully explored.
To the greatest extent possible, the money we invest in infrastructure development must circulate inside the country, and help grow our economy, develop our skills, as well as our manufacturing and industrial base.
As we improve capacity and efficiencies in our rail infrastructure, we must also ensure meaningful transformation within our ranks.
We urge Transnet to continuously review its employment equity targets. There must be a deliberate programme to develop and nurture specialist technical skills amongst previously disadvantaged employees.
Failure by SOEs to transform undermines and puts brakes on the Government’s transformation objectives in the broader corporate sector, as the latter feels no pressure to transform if the former is not itself transformed. We are going to demand concrete action in this regard.
In conclusion, it has to be observed that in pursuing initiatives such as today’s, the SOEs will improve their competitiveness and efficiency, whilst helping government to achieve the goals of the new growth path of employment creation and skills development, poverty eradication and reversing inequality. This will be done in the context of building competitive and sustainable local industries.
South Africa is an indispensible anchor to Africa’s economic development. A prosperous South Africa benefits the nation and is a stimulus to Africa’s development.
This is a groundbreaking achievement for which we should all be proud. The agreement between Transnet and General Electric will go a long way towards ensuring that our SOEs play a significant role in advancing the goals of the New Growth Path.
Jobs, skills development especially engineering and technical skills, localisation of manufacturing of equipment, and ensuring that our logistics infrastructure, for which Transnet is responsible, works efficiently, are some of the key deliverables on which we are to be judged.
I thank you.