LETTER: Transnet committed to localisation policy
State-owned company is working with the IDC on setting up a local manufacturer of rail tracks in line with procurement policy
BusinessLIVE reports, in the article titled “Localisation will push up process and hamper recovery, warns Transnet, December 9”, that Transnet chair Popo Molefe “bemoaned government’s local government requirements, saying the policy could further weaken its financial position”.
Molefe said the following: “We have challenges of policy constraints which we have been discussing with the government. These arise out of local content requirements.
“Our understanding of local content requirements initially meant that we would procure products that are manufactured in SA. But in its application, local content requirements now compel state-owned companies to procure things that are not manufactured in SA but are procured from outside SA.
“We are compelled to procure them through middle-persons who then put up their own mark-up — so even before you acquire your equipment you have already lost a significant percentage of your budget for that particular equipment.
“So we have been engaging with DTIC [department of trade, industry & competition], DPE [department of public enterprises] and recently — last week — with National Treasury, because all these things mean we are not able to move the trains at the speed with which they have to be moved, and the cycle time becomes elongated.”
Transnet is not in any way opposed to the government’s localisation policy. To the contrary, as a state-owned company, we remain committed to supporting localisation, for the industrialisation of the SA economy.
In this regard, Transnet is working with the Industrial Development Corporation (IDC) on the establishment of a local manufacturing facility for the rail track. To this end, Transnet has committed to procure from this local supplier for a period of up to 15 years, to ensure viability.
Furthermore, Transnet has committed to deepen local capacity and capability by developing suppliers to manufacture components in the rail industry to supply domestic and regional markets. This would represent a major milestone in Transnet’s transformation imperatives.
Work is under way with Trade & Industrial Policy Strategies, an agency of the DTIC, on a rail master plan, similar to the automotives master plan, which would drive investment in this sector in SA. This work is expected to be completed by the end of February 2022.
We continue to engage with the government on these initiatives, in the interests of the broader SA economy.
Ayanda Shezi
Transnet spokesperson
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