Transnet seeks court order to set aside locomotive tender

TRANSNET and the Special Investigating Unit (SIU) have launched an application in the High Court of South Africa to review and set aside four contracts concluded by Transnet in 2014 with original equipment manufacturers (OEMs) to acquire 1,064 locomotives.

The contract value was R54.4 billion, one of the largest single procurement events by a state-owned company.

The contracts in 2014 were with Bombardier Transportation South Africa; China South Rail, now called CRRC E-Loco Supply; China North Rail, now called CNR Rolling Stock South Africa; and General Electric South Africa Technologies (GE).

Transnet and the SIU in their court papers said the procurement was based on a flawed market demand strategy and that the laws, government instructions and Transnet policy were deliberately ignored to make the tender awards, conclude the contracts and effect payment to some of the OEMs.

In December 2018, Transnet invited the four OEMs to enter into negotiations for an equitable remedy, but an agreement was unable to be reached and the remedy with GE required supplementation.

“Accordingly, Transnet and the SIU are asking the High Court to set aside the locomotive supply agreements and to impose a just and equitable remedy,” a statement said.

The key argument in the application was that the OEMs were not entitled to benefit from locomotive supply agreements that were awarded in an irregular and illegal manner, the statement said.

– BUSINESS REPORT