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Speech by Lynne Brown at the China Development Bank Loan Announcement, 4 June

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Speech by Lynne Brown at the China Development Bank Loan Announcement, 4 June
04/06/2015

Mr Liang Shugen, Chinese Consul-General in Cape Town

Mr Li Gang, China Development Bank

Chairperson of Transnet, Ms Linda Mabaso

Acting Group Chief Executive of Transnet, Mr Siyabonga Gama

Acting Director-General, Ms Matsietsi Mokholo

Members of the Transnet board

Members of the Transnet executive committee

Members of the media

Distinguished guests

Ladies and gentlemen,

Today marks a new day in Transnet's history. This State-Owned Company is starting an association with the China Development Bank which I am sure will open the door for other State-Owned Companies to emulate.

It is apt that this should take place during the hosting of the World Economic Forum on Africa not far from here.

Before I go into detail of this association, allow me to make a few remarks. The foundation of today's event was laid in December 2014 when President Jacob Zuma and his Chinese counterpart, President Xi Jinping, signed a wide ranging Memorandum of Understanding to cement the bilateral relationship between the two countries.

Part of that $5billion MoU between the Presidents of the two countries included a pledge that China Development Bank would provide a $2.5billion (R30 billion) loan facility to Transnet to fund the acquisition of locomotives from China South Railway and China North Railway.

Today, I am happy to announce that Transnet will therefore be drawing on the

first tranche of the loan from China Development Bank - R18billion.

The acquisition of locomotives from China South Rail and China North Rail forms part of the much publicized 1064 locomotive acquisition programme – the biggest locomotive acquisition programme since the establishment of Transnet.

The two Chinese locomotive Original Equipment Manufacturing (OEM) companies will be responsible for delivering 591 locomotives over the next 4 years. This transaction is expected to yield local job creation opportunities, increaseSouth African rail manufacturing capacity and drive skills development as the contracted OEMs are expected to adhere to stringent localization and supplier development targets.

Both China South Rail and China North Rail have complied with the minimum local content criteria for rolling stock of 60% for electric locomotives and 55% for diesel locomotives. The awarding of the loan by China Development Bank reaffirms the healthy appetite from foreign investors to fund the Transnet build programme. The

State-Owned Companies strong balance sheet continues to pave the way for funders to participate in the South African infrastructure build programme.

Transnet is currently in its third year of its Market Demand Strategy – its rolling seven-year investment programme which now stands at R337billion. The company has spent almost R100billion over the past three years on the MDS.

Chairperson of Transnet Linda Mabaso and Acting Group Chief Executive, your prudent leadership has definitely been noticed. Today's drawing of the first tranche of the loan is a vote of confidence in a State-Owned Company that has been able to transform itself.

As we celebrate the funding of the locomotive transaction, I would like to urge Transnet to ensure compliance with localization and job creation deliverables. As Shareholder, I will expect regular updates of how the South African economy has benefitted from this historic procurement.

Let me congratulate Transnet's leadership and China Development Bank on the conclusion of this transaction. This transaction goes a long way in strengthening and enhancing our bilateral relationship with China. Furthermore, it also reinforces collaboration with our BRICS partners.

For enquiries contact Mr Colin Cruywagen on 082 3779916

Issued by the Department of Public Enterprises

Page last modified:02/10/2015 12:41