Transnet Saldanha Bay, plans to buy up to 100 locomotives
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Transnet Saldanha Bay, plans to buy up to 100 locomotives

State-owned freight logistics group Transnet will aim to purchase between 75 and 100 locomotives a year over “a prolonged period” to reduce the average age of its locomotive fleet from 30 years to below 20 years, acting CEO Chris Wells reports.

Writing in the group’s 2010 annual report, released on Friday, Wells indicated that the intention was to “smooth” the acquisition cycle so as to created a stable pattern of demand that would support the development of local industry around the procurement plan.

A similar fleet plan was being investigated for harbour cranes and was in line with government’s Competitive Supplier Development Programme (CSDP) to which Transnet had signed up.

The CSDP aims to leverage procurement by State-owned enterprises such as Transnet and Eskom to support domestic industrialisation and encourage foreign original-equipment manufacturers to develop downstream supplier linkages in South Africa. During 2010, Transnet established a supplier development centre of excellence to focus on CSDP delivery and enterprise development.

The utility planned to spend R93,4-billion on capital projects over the next five-year period to 2015, of which R34,2-billion would be spent on expansionary projects and R59,2-billion on maintaining existing infrastructure and equipment.

Wells reported that about 59% of this capital expenditure would be directed towards Transnet Freight Rail (TFR) and Transnet Rail Engineering.

Some 26% would be invested in projects relating to Transnet Port Terminals and Transnet National Ports Authority, while the bulk of the 15% balance would be directed towards Transnet Pipelines.

Future major projects outlined by Wells included:
• A R16-billion expansion of the coal export line from the 62-million tons transported in 2009/10 to 81-million tons by 2014/15. The capacity increase would require the upgrade of existing rolling stock, rail and yard expansions, electrical power upgrades, as well as an additional 110 new locomotives. Feasibility studies were also under way to determine whether there was a business case to increase capacity beyond 81-million tons and to assess the transport needs for the coalfields in the Waterberg region.
• A feasibility study, together with iron-ore and manganese exporters, to determine the viability of significant future expansions and the future location of the manganese terminal, were also under way. Envisaged was an iron-ore export expansion from 60-million tons yearly to over 80-million tons, as well as manganese expansion from 5,5-million tons yearly to more than 14-million tons a year. Transnet was still weighing up whether the manganese terminal would be located at Ngqura, in the Eastern Cape, or Saldanha Bay, on the West Coast. Both the iron-ore and manganese exporters strongly favour the expansion of the corridor through Saldanha Bay.
• A significant expansion of container handling, with studies suggesting that this capacity might need to be expanded by six times over the next 30 years. A project team was developing a container strategy and Transnet had initiated a process to procure Salisbury Island, in Durban, which could create additional capacity of about 600 000 containers. The group was also assessing the purchase of the Durban International Airport site for back of port activities and a possible future “dig-out” port.
• And, substantial investments into TFR’s general freight business to increase yearly volumes from the current 72-million tons to 110-million tons by 2015.

“Due to their magnitude and long payback periods, it is highly unlikely that these investments can be financed solely on the strength of the Transnet balance sheet,” Wells wrote, again indicating that private sector participation would have to play an increasing role in future capacity creation.

“Initiatives are already under way to develop the framework and governance processes for the private sector participation (PSP).”

PSP models would be pursued in the following instances:
• When the required investments are core to Transnet’s strategy, but the quantum of investment would be unaffordable for Transnet alone to fund. Examples include the expansion of the export coal line beyond 81-million tons and the iron-ore line beyond 80-million tons.
• Where specialised assets can be owned by private parties and operated by Transnet.
• And, when business opportunities within ports, rail and pipelines are noncore to Transnet’s network strategy.

“Transnet will partner with the private sector to accelerate the pace of infrastructure investment and to expand the benefits of private sector capital, knowledge, expertise, systems and technologies. Private sector partnerships will also expand the range of services offered by Transnet to customers,” Wells concluded.

However, the PSP strategy still requires Cabinet approval.

Source Edited by: Creamer Media Reporter

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