Transnet refutes security tender allegations

Debt-ridden South African state freight carrier Transnet is not only fighting for its financial future. It’s also up against an unprecedented level of theft and vandalism on the railway network. The latter is proving just as crippling as the mountain of debt owed to the government and creditors.

The state-operated freight logistics provider has, for some time, been a byword for corruption – something the operator itself vigorously refutes. However, allegations over sharp practices by its government owners, have had tangible impacts on the operator, not least contribution to debts equivalent to tens of billions of dollars.

Now, the company believes it may have been the subject of corrupt tendering for security services – the very means by which it plans to overcome the daily scourge of theft from the railway network.

Lack of security, lack of locomotives

Transnet, operating under the brand Transnet Freight Rail (TFR) has been in the South African media spotlight over allegations that its “Outcomes Based Security” (OBS) tendering process was the subject of further corruption.

“In a move to turn the tide against theft and vandalism of essential infrastructure across the organisation’s logistics network, TFR awarded security contracts to five Security Service Providers (SSPs) to service its corridors,” explains a statement from the company. “Vandalism of infrastructure and assets leads to loss of revenue and increased security and maintenance costs for critical infrastructure for operations.”

However, Transnet is battling more than blatant theft from the railway corridors. For example, the company is struggling with a lack of motive power, and it is unable to fulfil its obligations for the movement of bulk raw materials, such as coal. It has fallen behind its own targets to move 170 Mt of cargo this calendar year.

The position is even more challenging after contracts for the supply of over 1000 locomotives were cancelled amid a scandal that’s become known as ‘state capture’. It’s alleged that individuals within the South African government colluded to award contracts on a biased basis, which unfairly benefited those involved financially.

Concurrently, cable thefts – including overhead line equipment on electrified routes – have become a severe constraint on services. Endemic vandalism, called sabotage in some quarters, has crippled commuter passenger services and freight services alike.

Transnet angry at “peddled narrative”

To combat the theft issue, Transnet says it followed an open and competitive bidding process in the awarding of a new security contract, a process it started just over two years ago.

“The process of bid evaluation and award is conducted through various governance committees and is not determined by any single individual,” says Transnet.

However, in recent weeks, there have been media reports casting doubt on the integrity of the OBS tender process, particularly around the appointment of Fidelity Group being appointed as one of the OBS SSPs.

Allegations have come from the African Security Congress (ASC), a political party, formed specifically to lobby for the interests of private security firms. in response, Transnet has commissioned an investigation to determine the facts and associated circumstances about the allegations on the award of the tender.

Reports in the South African media suggest that a contract for essential electrification equipment was cancelled to provide funds for the security company to be appointed.

“The peddled narrative that the cancellation of a 2021 tender for the manufacturing of a Contact Wire Reflector device on behalf of Transnet was motivated to allow for the award of the Fidelity Group as one of the OBS SSPs is regrettable,” says the company, claiming the two matters are unrelated.

In a matter of reputational damage, the carrier says it will not let the matter lie unaddressed. “Transnet has zero tolerance for collusion and corruption,” concluded its statement. “Should Transnet be presented with factual evidence of such conduct, Transnet will reopen the matter,” it said.