Up to 200 new locomotives bought by Transnet in a R54bn deal tainted by state capture are lying idle and awaiting spares, costing SA billions in lost exports.
The rail utility is fighting an uphill battle to undo the ruin of the Gupta era and turn its ambitious road-to-rail strategy into reality.
The engines out of order make up almost half of the 500-odd locomotives that were eventually delivered when Transnet in 2014 splashed out nearly R54bn — from an initial estimated cost of R38.6bn — on 1,064 locomotives that were meant to boost SA’s exports and attract cargo from the roads.
Instead the Guptas and their local allies received millions in kickbacks, according to testimony heard at the Zondo commission, and less than half the fleet was delivered.
The stricken rail power fleet, maintenance problems and rampant theft of overhead cables are further bad news for a rail sector that has been bled to death by state capture, with almost the entire rail passenger system having ground to a halt under the mismanagement of the state-owned Passenger Rail Agency of SA.
Ironically, the move by Transnet and the Special Investigating Unit to approach the courts earlier this year to cancel the 1,064-train deal has left the utility at the mercy of the Chinese rail giants that are among four suppliers and are refusing to provide spares while litigation continues.
Transnet Engineering chief executive Ralph Mills said the ongoing cable theft crisis could make Transnet’s entire electric locomotive fleet redundant.
“We’re going to have to think about de-electrifying the fleet,” he said.
At its peak, some 8,000km of SA’s 20,000km network was electrified, though vandalism and line closures have reduced that figure by hundreds of kilometres.
The theft of cable is most keenly felt on the heavy-haul coal line that links the Highveld’s coal fields with the export terminal at Richards Bay.
Mills said the “1,064 programme” was an issue of state capture and that it did not deliver what it was meant to.
“There were no spares contracts included in that — apart from initial delivery spares, there has been no support [from the manufacturers]. We have been limping along trying to keep these locomotives going,” he said.
So bad has the crisis become that the possibility of de-electrifying the entire freight rail fleet is being mooted as a solution
There is also ongoing litigation with all four manufacturers involved in the deal, he said.
Transnet is able to continue working with General Electric, which has delivered its 233 diesel locomotives, he said. “The challenge around that is procurement issues.”
Meanwhile, the BT Alstom contract to supply 240 electric locomotives is continuing, though at a slow pace.
“There’s no problem getting spares out of them,” said Mills. “The problem comes with the Chinese manufacturers because the contract is suspended and there’s no service or goods exchange between the two parties.”
The result is that the large fleet of Chinese-built 22E electric locomotives is “slowly winding down because we can’t get spares for them”, said Mills.
The crisis has been exacerbated by a shortage of spares for the 195-strong fleet of 20E and 21E electric locomotives supplied by CSR before the 1,064 deal.
As a stopgap measure, Transnet is desperately extending the lifespan of its so-called legacy locomotive fleet.
The legacy fleet comprises a mixture of diesel and electric locomotives of various types and classes, some of which are nearly half a century old, and which have been given only basic maintenance in anticipation of the arrival of the new engines.
“We’ve had to continue operating some of our legacy fleet for a bit longer than anticipated, and of course those come with their own problems,” said Transnet Freight Rail (TFR) CEO Sizakele Mzimela.
“There’s even greater maintenance that needs to be done and a greater failure rate because we had anticipated that we would already have pulled them out of service.”
Meanwhile, Transnet is doing a risk analysis and looking at scenarios such as what it will do if there is no further contact with the Chinese manufacturers.
“Worst-case scenario, we have the technology in Transnet Engineering to reverse engineer the whole locomotive,” Mills said. “But it’s a big job, make no mistake.”
Transnet CEO Portia Derby told parliament earlier this year that of the 1,064 locomotives only 583 were delivered, with General Electric having delivered all 233 locomotives that it was contracted for.
China South Rail (CSR) was contracted for 359 locomotives and has delivered 260 to date. China North Rail (CNR), which was contracted for 232 locomotives, delivered only 22. Bombardier Transportation, contracted for 240 locomotives, has delivered 68.
The ailing locomotive fleet is an extra headache for Transnet, which has been hard hit by a surge in cable theft. So bad has the crisis become that the possibility of de-electrifying the entire freight rail fleet is being mooted as a solution, with Transnet falling well short of its targets and freight shifting to road at an unprecedented rate.
“We’re seeing increased theft of overhead cable, and this is well organised,” Mzimela told the Sunday Times.
She said Transnet is working closely with its customers in an attempt to combat cable theft, which has shot up by 177% in the past five years.
Where previously Transnet had been plagued by people digging up signal and communications wiring — “possibly for people to put some bread on the table” — the theft of the overhead cables from which electric locomotives draw power point to organised and well-resourced gangs.
The result is a cascade of delays that affect train services on entire corridors, Mills said.
Replacing the cable and getting trains running again depends on where the theft happens and how quickly repair teams can get to the site.
“Meanwhile, every single hour that we lose impacts on the number of trains that we are able to move.”
Mzimela said the paltry number of people convicted for cable theft is “disappointing”.
“A number of people have been arrested but convictions are very, very low,” she said.
Cable theft and capacity problems at the Richards Bay Coal Terminal have resulted in some major coal exporters lowering their projections.
In May, Exxaro Resources said it anticipated a 31% drop in export sales as a result of Transnet’s capacity problems. In August, CEO Mxolisi Mgojo told reporters that South African coal exporters had missed out on exporting some 9-million tons in the first half of 2021.
At the same time, the price of coal surged from $80 to $180/ton.
Meanwhile, chrome miner Tharisa has been forced send as much as 50% of its production to port by truck, compared with 30% in normal times.
This week, the Minerals Council SA (MCSA) estimated the opportunity cost for its bulk commodity members in iron ore, coal and chrome to be at least R30bn because of planned and contracted tonnages that have not been railed due to TFR’s service constraints.
“Difficulties at harbours like Richards Bay for chrome exporters merely compound these opportunity costs as they must then use trucks to access Maputo harbour, and that comes with its own problems of lengthy border delays,” said MCSA spokesperson Allan Seccombe.
“The difficulties the mining industry is experiencing with Transnet are symptomatic of the delayed and broader infrastructural reforms we and other business organisations have called on the government to urgently implement to attract investment and create jobs.”
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