State-owned logistics group Transnet has awarded the tender for the supply of 95 electric locomotives to a consortium comprising Chinese manufacturer China South Rail (CSR) Zhuzhou Electric Locomotive and local black economic-empowerment (BEE) consortium Matsetse Basadi.

Speaking at the official signing at Transnet Freight Rail’s (TRF’s) Capital Park depot, in Pretoria, on Monday, Public Enterprises Minister Malusi Gigaba said the R2.6-billion contract could lay a platform for South Africa to become a significant locomotive original-equipment manufacturer (OEM) and further develop trade and investment relationships with foreign countries.

The agreement marked the first time Transnet would procure locomotives from a Chinese OEM.

Transnet’s minimum local-content level of 60% stipulates that the majority of the manufacturing and assembly of the locomotives would take place in South Africa. Engines and some components would be imported from China.

The first 10 locomotives would be assembled in CSR’s factories in China. The remaining 85 would be made in South Africa, with minimum supplier development targets of 60.5% of the total value of contract.

This was in line with Transnet’s commitment to the Department of Public Enterprises-led Competitive Supplier Development Programme, which aimed to localise the manufacturing of imported equipment.

The contract would enable skills development and knowledge transfer within the domestic manufacturing sector, as well as create jobs, capability and capacity, and enable South Africa to establish itself as an OEM hub, exporting regional and internationally.

Zhuzhou Electric Locomotive, in a 70:30 joint venture with Matsetse Basadi, would deliver the first of the locomotives to TFR’s general freight business by December 2013.

The final batch would be delivered by September 2014.

The newly ordered locomotives, which would be configured to operate using both 3 kV DC and 25 kV AC power supply, are more energy efficient and use less power on TFR’s DC drive technology. They are also capable of regenerating back to the power grid and have longer maintenance cycles of 90 to 120 days, compared with the current 36 to 60 days.

Transnet issued tenders – in line with its market demand strategy and R300-billion seven-year investment programme – to add 465 diesel locomotives and another 599 electric locomotives to its general freight business fleet by 2019.