Transnet financing aids big locomotive buy

South Africa's Transnet said Monday, March 2, 2015 it has concluded financing to acquire 1,064 locomotives, estimated to cost $4.3 billion, for its Transnet Freight Rail subsidiary, which were ordered from four suppliers one year ago.

CSR Zhuzhou Electric Locomotive, China, and Bombardier will supply a total of 599 electric locomotives, while GE and CNR will deliver 465 diesel locomotives. All but 70 units will be assembled in South Africa, Transnet said.

Transnet signed two funding agreements March 2 to cover the Bombardier and GE locomotives. The US Exim Bank has provided a 14-year funding guarantee for the 233 ES40Aci Evolution Series diesel locomotives being supplied by GE, with funds being raised from three institutions.

Meanwhile, Canada’s trade finance agency, Export Development Canada (EDC), on Monday, March 2, announced up to US$450 million in financing for Transnet, to “partially finance” the US$1.2 billion contract with Bombardier Transportation South Africa (Pty) Ltd. (BTSA), for the delivery of 240 TRAXX dual voltage locomotives. BTSA is a 74%-owned subsidiary of Bombardier Transportation GmbH, which in turn is wholly owned by Canada’s Bombardier Inc. The balance of BTSA’s ownership is made up of South African investors.

General Electric South Africa Technologies (a unit of Erie. Pa.-based GE Transportation) has completed technical design and its first locomotive will be rolled out in July. The locomotives will be assembled at Transnet Engineering’s Koedoespoort workshops near Pretoria.

CSR Zhuzhou Electric Locomotive has also completed technical design and production of the first locomotives is under way in China, with rollout scheduled for the end of this month. Local assembly will be carried out at Transnet Engineering’s Durban facility.

Technical design is complete on the six-axle dual-voltage (3kV dc and 25kV ac) Bombardier Traxx Africa, and these locomotives will also be assembled at Durban.

CNR Rolling Stock South Africa (Pty.) Ltd. has completed 90% of the technical design on its six-axle single cab diesel locomotive. Local assembly of these units will be carried out in Durban.

The locomotives are a key component of Transnet’s Market Demand Strategy (MDS), more than two-thirds of which is funded from the company’s revenue, with the remainder coming from domestic and international capital markets.