Transnet Engineering Chief Executive, Bessie Mabunda recently delivered a presentation on Transnet Engineering’s business strategy and vision to guests that were invited to an Industry Day that was held at Transnet Engineering’s Koedoespoort Plant in Pretoria. Mabunda presented how Transnet Engineering is positioning itself to become the preferred technical service provider for the Leasing Company (LeaseCo), and boost its brand visibility.
Transnet says the entity’s turnaround will largely rely on its engineering division as an original equipment manufacturer leveraging its eight core businesses that include locomotives, wagons, coaches, wheels, and rolling stock.
The leadership team also participated in a panel discussion highlighting the importance of collaboration, innovation, and technical excellence in supporting the evolving needs of the industry.
Transnet will soon launch a rolling stock leasing company called LeaseCo and is also diversifying into the supply of components to make up for the failed Chinese locomotive deal.
The rail company believes the efforts will return it to financial profitability in the coming financial year.
Transnet Engineering’s foundry in Koedoespoort, Pretoria used to be a busy floor
“We did issue a request for information at the beginning of the year, and this has closed in March. So basically what that is sticking to do is, given that we had unsolicited approaches,” said Mabunda.
“We want to formalise this and to see if there are entities out there that have access to spares, which are either replacement, components for the CRRC (China Railway Rolling Stock Corporation) parts or to some extent, even original parts manufacturer that may have worked with the CRRC, who may be interested in engaging with us directly to see if there’s any opportunity for that.”
Mabunda added: “So, we are going to be going through the RFP (Railway Protection Force) once, the RFI (Request for Information) side of things have been completed, and we then see if there will then be any viable solutions that come.”
The Joburg High Court of South Africa, Gauteng division, declared the 2014 Locomotive Supply Agreement (LSA) between Transnet SOC Ltd and Wabtec South Africa Technologies (formerly General Electric South Africa Technologies) invalid, setting aside a contract valued at approximately R8 billion for the procurement of 233 diesel locomotives.
Flagged for procurement flaws
The contract, part of Transnet’s broader 2014 deal to acquire 1 064 locomotives for R54.4 billion, was flagged for procurement flaws. The SIU and Transnet argued that the tender process was marred by a flawed market demand strategy. Also by deliberate violations of laws, government instructions, and Transnet’s own policies.
Transnet is running out of cash, Moody’s warns
Meanwhile Transnet has projected confidence in its ability to raise funding and meet its upcoming debt obligations, brushing aside a dire warning by Moody’s Ratings that the freight and rail group is set to run out of cash in three months’ time.
The melting platform at Transnet Engineering’s foundry in Koedoespoort, Pretoria
The ratings firm has placed Transnet on review for a possible credit downgrade, citing concerns over its “unsustainable” capital structure, deteriorating liquidity position, slow pace of operational improvements and absence of support from the government.
But Mabunda says Transnet Engineering is being overhauled with the aim of turning it into a world-class engineering entity, leveraging on several prioritised opportunities arising from the country’s rail reform and open access. This includes the entity capitalising on increased demand for manufactured rolling stock and refurbishment of existing locomotives and wagons, among other equipment, to support the modernisation and capacity expansion of the rail network.
Foundry business struggling
According to reports during a panel discussion, it was noted that Transnet Engineering’s foundry business was struggling and required funding, with this presenting an opportunity for stakeholders.
Transnet Engineering’s Koedoespoort facility, in Pretoria, has the capability to work with different types of locomotives and re-manufacturer and re-engineer these. Transnet Engineering is working with other original equipment manufacturers on possible collaborations.
