Passenger Rail Agency of South Africa (Prasa) CEO Lucky Montana said on Wednesday that he “was confident” the agency would ink the deal for the procurement of 3 600 rolling stock units with preferred bidder, Gibela Rail Transportation, by the end of July.

Gibela Rail Transportation comprised French multinational Alstom and local engineering company Actom, and would welcome black economic empowerment (BEE) partners later this year.

Speaking at the AfricaRail 2013 exhibition in Johannesburg, Montana said the two parties had already concluded talks on all major issues involving the ten-year, R51-billion contract.

The first unit was expected to be delivered in 2015.

Montana said the deal would see the establishment of a new, greenfields industrial complex at an as yet unnamed site, housing the rolling stock manufacturing plant, as well as a number of component suppliers and training facilities.

The announcement on the location of this site was expected in August.

Freight rail parastatal Transnet was set to play a pivotal role at this industrial park, as it was expected to participate in the local manufacturing process, noted Montana.

He added that “government would assume the risk of the factory”, as it would remain a South African asset following the completion of the Prasa contract.

Montana emphasised that the industrial complex was to become a hub for rolling stock manufacturing for Africa and the rest of the world.

Transport Minister Ben Martins added that government “was not satisfied” that the new complex would only built trains for South Africa.

“We want to be sure South Africa is in a position to export all components used in train manufacture to the rest of the world. That is our medium- to long-term objective. We are on track and happy with the progress we are making.”

Alstom Transport president Henri Poupart-Lafarge said a facility such as the one envisaged would provide the company with “a fantastic footprint” for doing business in South Africa, Africa and the rest of the world.

PROJECT FUNDING
Prasa had already secured R40-billion in funding from government for the Gibela contract, which was expected to be the first deal in its more than R100-billion rolling stock renewal programme, said Montana.

The agency was currently locked in negotiations with National Treasury to secure the remaining R11-billion, which was above the project’s R40-billion affordability limit set by the government purser.

Montana said he was confident Prasa would receive the remaining money from Treasury.

He believed it was “too expensive” for Prasa to raise the outstanding funding on the open market, owing to the agency’s balance sheet and passenger numbers.

Prasa was expected to make an announcement on the identity of Gibela's BEE partners by the end of July, with BEE participation in the rolling stock programme anticipated to be more than 40%.

Local content on the new units, to be used on the Metrorail system, was expected to be around 70%.

Montana said the ten-year project would create 33 000 jobs.