Capital Investment by Transnet Logistics Group Critical for Growth in South Africa - Minister Malusi Gigaba Says

By Department Of Public Enterprises Republic Of South Africa, PRNE
Wednesday, March 23, 2011

DUBAI, UAE, March 24, 2011 - Massive capital investment by logistics group Transnet will become a
major driver of economic growth in South Africa, Public Enterprises Minister
Malusi Gigaba said on Thursday.

Gigaba, whose area of supervision also includes South African Airways,
arms firm Denel, power utility Eskom, and nuclear power station Koeberg, said
South Africa was well placed as a key player in southern and eastern Africa
thanks to extensive fleet procurement by Transnet.

Minister Gigaba spoke at the 4th investment forum of the 19-member Common
Market for Eastern and Southern Africa (COMESA) in the Emirates city of
Dubai, where he led a high-powered delegation of government and business
leaders. Some 1,000 government, policy and business leaders are attending.

Like other African railways, Transnet was confronted with major
infrastructure problems, Gigaba said, explaining that the locomotive and
wagon fleet at Transnet Freight Rail, an operating division of Transnet, was
on average 26 years old.

"As a result, Transnet plans to spend billions of rands (hundreds of
millions of dollars) on capital expenditure for rail related equipment and
infrastructure as well as expanding maintenance and repair capacity at
Transnet Rail Engineering, which is responsible for the manufacture and
repair of Transnet's rolling stock," Gigaba said.

"The massive recapitalization programme of Transnet is regarded as having
the potential to become a major driver for economic growth in South Africa.
Much attention and effort is being given to increasing local spend and to use
this capital expenditure programme to entrench world class technologies,
suppliers and service providers in South Africa," he said.

He said South Africa's Competitive Supplier Development Programme (CSDP)
aimed to reduce the import content of the capital and associated operational
expenditures, while increasing the long term economic benefits for the local
supplier industry.

Whilst volumes in other Southern African Development Community (SADC)
countries are not sufficient to warrant a CSDP programme, consolidation of
demand provided an opportunity to ensure a steady state of investment to
deliver benefits of a CSDP type programme for the region.

Gigaba said South Africa offered the region "the opportunity to utilise
the CSDP and Transnet Rail Engineering capabilities to contribute to
maintenance capability in the region as well as the regional rolling stock
leasing pool.

Gigaba also spoke in support of the North-South (transport) Corridor
launched in April 2009, saying South Africa's approach to integration was
about addressing the supply-side constraints and focusing on real economy
cooperation between member states.

The North-South Corridor Pilot Aid for Trade Programme is a joint
COMESA-EAC-SADC initiative. Its aim is to reduce the time and costs of road
and rail travel along the two priority corridors: Dar es Salaam corridor
linking the Dar es Salaam port to the Copperbelt, and the North South
Corridor which links the Copperbelt to the southern ports of South Africa.

The Pilot Programme in the rail sector focuses on the back-bone rail
systems along the North South Corridor (essentially the NS railway system
from the South African border, through the Copperbelt to the Democratic
Republic of the Congo
, and the rail system feeding the Port of Dar es Salaam.

The pilot Aid for Trade programme proposes concession agreement studies,
upgrading and restructuring of the Tanzania-Zambia Railways (Tazara),
extension of the Northwest Railway, strengthening the Southern African Rail
Association and regional operating agreements, upgrading of Victoria Falls to
Bulawayo Railway and the establishment of a regional locomotive and wagon
leasing pool.

    Media Contact: Ayanda Shezi (, +27-7-988-02059
    Department of Public Enterprises, Republic of South Africa

Media Contact: Ayanda Shezi (Ayanda.Shezi at, +27-7-988-02059, Department of Public Enterprises, Republic of South Africa

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