The money is needed to pay for new locomotives being built by US-based General Electric (GE) and Bombardier Transportation South Africa, which is wholly owned by the Bombardier engineering group, headquartered in Canada.
The first arrangement, which covers 293 engines being constructed by GE, involves loans of ZAR2.25B (US$191M) being concluded with the South African banks Barclays/Absa and Standard Bank. A further ZAR1.5B (US$127M) has been arranged with Old Mutual. The ZAR6B (US$508M) loan has been fully guaranteed by US-Exim Bank. It comprises a 14-year facility with draw-down over the next three years. This covers the delivery schedule of the locomotives.
The other deal, which is for a larger ZAR7B (US$593M), involves ZAR5.2B (US$441M) being advanced by Export Development Canada and ZAR1.8B (US$153M) by Investec Bank. This has a 13 year pay-back period and is to help pay for the 240 engines being manufactured by Bombardier.
In all, Transnet Freight Rail (TFR) has more than 1,000 new locomotives on order. In addition to GE and Bombardier, China South Rail Zhuzhou Electric Locomotive and China North Rail Rolling Stock are designing and building engines for the company. All of the locomotives are being fabricated in South Africa, with Transnet’s factories in Koedoespoort, Pretoria, and Durban being used.
TFR’s capital investment programme is critical to it increasing capacity across its rail network, raising the reliability of its services and taking traffic off South Africa’s highways.