EDITORIAL: Ramaphosa needs to right Transnet’s wrongs

It is hard to accept Transnet’s version that more than 100 Chinese-made locomotives are lying idle due to the intransigence of China Railway Rolling Stock Company (CRRC). It sounds more like leadership ineptitude.

By way of background, a few years ago Transnet signed a multi-billion rand transaction to procure 1,064 diesel and electric locomotives to modernise its ageing fleet. This was meant to tackle inefficiency and enable SA commodity exporters to take advantage of the next commodity cycle boom. But it was never to be.

Instead, the new Transnet leadership, meant to clean up state capture, canned the transaction, arguing the deal was tainted by corruption.

Quite rightly, the implicated Transnet executives who set up the transaction were sacked, and are now being prosecuted.

Months later, though, Transnet’s corruption busters found themselves in an awkward position: they had taken delivery of locomotives from CRRC, but had no spare parts to maintain them. As expected, the Chinese refused to supply the parts.

Months of haggling ensued and failed to yield anything. Remarkably, Transnet even approached other locomotive manufacturers to supply parts to get the trains back in operation as another commodities boom cycle was unfolding.

A few months ago, Transnet announced that it had reached an in-principle agreement with CRRC. This fell through. With no more cards to play, Transnet went to the market for these parts.

This incompetence has cost the economy billions. The Minerals Council has estimated the loss at more than R100bn and about R50bn to the fiscus. During the pandemic, the tax contribution of the mining companies made it possible for the government to sustain the R350 social distress grant.

Power outages and Transnet’s self-infected inefficiencies continue to strangle SA’s economy.

Business has been frustrated, and has offered a helping hand. Instead of accepting business’s offer to assist, Transnet’s management was defensive and sought to racialise the issue as big business being against transformation.

On Tuesday, Ramaphosa summoned Transnet’s leadership to call for the obvious: do your jobs, attend to your inefficiencies, expedite access of private-sector players to Transnet’s rail and ports infrastructure, and work with business to sort out the mess.

After the meeting, Transnet curiously announced that public enterprises minister Pravin Gordhan would travel to Beijing for a political solution to the spares saga that Transnet now blames on the refusal by CRRC to comply with tax and exchange controls authorities. This is incredible.

Despite their pretence to be commercial entities, Transnet and CRRC are wholly state-owned companies, which makes the dispute essentially a diplomatic one. The impasse has made a mockery of China’s bilateral relationship with SA, including their partnership under the Brics (Brazil, Russia, India, China and SA) socioeconomic development pact.

Given the cost to the economy of Transnet’s mishandling of the spares issue, Ramaphosa — not Gordhan — should visit Xi Jinping, his Chinese counterpart, for a durable solution.

Meanwhile, though, the public and its parliamentarians deserve an explanation from the government and Transnet on the mishandling of this avoidable debacle, and why it took this long to escalate it to government-to-government level. If the explanation, assuming one exists, is found wanting, those responsible for this costly fiasco should be made to account, including reimbursing money spent on lawyers.