Prasa names BEE firms for consortium

The Passenger Rail Agency of SA (Prasa) has selected three black economic empowerment (BEE) firms to partner the Gibela Rail Transport consortium, which is leading its R51 billion rolling stock fleet renewal programme. The parastatal announced yesterday that Khiphunyawo Rail, Community Rail Services and black investor enterprise Elgin-Identity Rail would be among the five BEE partners that would hold a 30 percent shareholding in the project. The other two are Prasa’s employees trust and an education trust that Prasa said would support the rebuilding of skills in the rail sector. Khiphunyawo Rail is the only one among the chosen BEE partners that is currently involved in the rail sector. The company owns SA Freight Logistics (SAFLog), which maintains rolling stock and rail tracks, among other things.

SAFLog has been doing work for Transnet. It was one of the first BEE companies in South Africa to obtain a train operator railway safety permit. Community Rail Services is a new entrant in the rail sector and is comprised of Kaelo Investments and Parmtro Investments, which has a BEE shareholding in financial services firm Marsh South Africa. Prasa did not disclose who the directors of the companies are. It said only that all organisations included people with disabilities. The directors could not immediately be identified. Moffet Mofokeng, Prasa’s spokesman, said the company wanted partners without any rail service experience so that it could create a platform for new entrants, thus building the country’s capacity to manufacture and maintain rolling stock.

“There has not been investment in the rail sector for a long time. There [has been a] decline in capacity and skills migration and it was important that we encourage new entrants and have this education trust,” Mofokeng said. He said the education trust would fund studies in rail engineering and rail technology, as well as artisans and welders, among others. Mofokeng said that once all the contracts had been signed, Prasa expected the Alstom-led Gibela consortium would begin construction of a R2 billion factory in Johannesburg where the modern, technologically advanced coaches would be built. He expected construction on the factory to begin by next month and to take 18 months, at most.

During that period, Mofokeng said, Prasa expected to train the welders it would need because there were not enough in the country and the company did not want to import workers. Once manufacturing of the coaches began, Prasa would gradually phase out the old fleet. Mofokeng said about a third of the old fleet would be retired by 2015, the year in which between 200 and 240 of the new coaches were expected to be delivered by Gibela. He said there were currently talks about whether Alstom could import some of these coaches from its Brazilian plant if the whole 240 order could not be delivered by 2015. Prasa last bought a new passenger train coach in 1985 and the average age of its fleet is more than 40 years.

In the past two decades the company has relied on refurbishing its old trains because buying new ones was a large investment decision that required full government backing. The company said the feasibility study it had concluded for the fleet renewal programme showed that Prasa needed R123bn to renew its entire fleet over a period of 20 years. The 3 600 passenger coaches that Gibela is contracted to deliver between 2015 and 2025 would have cost about R61.5bn. But Prasa negotiated for R51bn. The National Treasury, however, only committed R40bn before the negotiations were completed. Now that the board has approved the tender, the company will ask for another R11bn from the Treasury.