State-owned Transnet says it has reached an impasse with CRRC E-Loco Supply, following an "unwillingness" on the part of CRRC to engage with the relevant authorities in South Africa to normalise its operations in the country.

Therefore, Transnet says that, as a matter of urgency, it will be issuing an open, competitive tender inviting any eligible original-equipment manufacturer (OEM) to step-in to rehabilitate the non-operational Chinese locomotives.

“This is a critical intervention not only for Transnet’s sustainability, but for the South African economy. The CRRC locomotives directly impact three major corridors (North, Northeast and Cape Corridors) that account for roughly 50% of Transnet Freight Rail’s revenue and support three primary mining sector segments, namely export coal, chrome and manganese,” Transnet points out.

After intensive good faith negotiations and following the conclusion of an in-principle settlement agreement on August 30, 2022, Transnet concluded a definitive settlement agreement with CRRC E-Loco on November 25, 2022.

A key contingent requirement introduced by CRRC at the time and also included in the definitive settlement agreement is the normalising of CRRC’s operations in South Africa by the South African Revenue Service (Sars) and the South African Reserve Bank (SARB) to allow Transnet to give effect to the definitive settlement agreement.

As independent organs of State, both Sars and the SARB are required to follow statutory prescript in considering applications by CRRC to normalise its operations in South Africa, Transnet explains.

The entity says it respects the independence and processes of these organs of State.

Among others, the definitive settlement agreement is meant to enable rehabilitation of nonoperational 22E locomotives (currently 161), long-term material and reliability support to Transnet, the repayment to Transnet of unjustified profits by CRRC and the delivery of the remaining 99 locomotives at the corrected price, subject to the outcome of Transnet and the Special Investigating Unit’s Review Application.

In addition, Transnet will, on January 13, issue a confined tender to the other existing OEMs for the repairs of the other long-standing locomotives, which were supplied by Wabtech, Mitsui and Alstom.

The resolution of this matter is key in supporting Transnet’s efforts to normalise its operations, enhancing the service provided to customers, and boosting the national fiscus, the entity states.