South Africa: The country’s Supreme Court has invalidated the contract between the largest freight operator Transnet and the American GE Transportation, unit of Wabtec since 2019, for 233 diesel locomotives. An action brought by Transnet and the Special Investigating Unit has been in progress since March 2021. Similar judgments are expected in relation to other contracts with CRRC and Alstom for the supply of a total of 831 locomotives.
All of these contracts, worth ZAR 54.4 bln ($2.9 bln) were inked in 2014. Deliveries did not stop until 2019, when the anti-corruption investigations began against former South African President Jacob Zuma and his administration. Wabtec has delivered all ordered diesel locomotives. Two CRRC units delivered 260 electric and 22 diesel locomotives out of 359 and 232 locomotives ordered respectively. Bombardier Transportation, acquired by Alstom in 2021, supplied 68 electric locomotives out of 240 ordered.
Transnet managed to reach settlements with Wabtec and Alstom, but not with CRRC. Wabtec has agreed to retain ZAR 8 bln ($430.1 mln) for all 233 diesel locomotives delivered to the operator. In addition, the US company will pay Transnet ZAR 70.3 mln ($3.7 mln) in contractual damages and provide a loan of a similar amount.
Alstom has resumed deliveries from 2022, having already delivered 130 electric locomotives, with the remaining 110 vehicles to be delivered by 2027. The company has also undertaken over the repair and supply of spare parts for CRRC locomotives. This will allow the locomotives supplied by the Chinese manufacturer to be put into operation, even if it refused to maintain them.
Faced with this, Transnet announced in 2022 that it planned to launch a new major tender for locomotives. The purchase was halted in the midst of signing settlements with manufacturers. The operator later said that a new tender for locomotives would not be announced until deliveries from Alstom were finalised.
