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Transnet’s tender for locomotives has been at the center of controversy.
- Yousuf Laher was part of a six-person team that evaluated bids for the acquisition of more than 1000 Transnet locomotives.
- The team’s criteria required it to include hedging and escalation costs for the bids in its report.
- Laher and his team were told to continue the evaluation without the costs, he told the commission of inquiry into the state seizure.
Yousuf Laher, executive manager of Transnet’s Freight Rail finance department, says its controversial tender for the acquisition of 1,064 locomotives was approved without critical coverage and escalation costs, without which it had been impossible to properly assess the tender prices.
Laher, who was part of the settlement’s six-person assessment and negotiation team in 2014, said the issue of hedging and escalation costs was one of several risks the team had highlighted, which needed to be shared in a report with the Transnet steering committee and its board.
However, the R38 billion price for 1 064 then skyrocketed to R54 billion and the exclusion of hedging and escalation costs was blamed.
On Wednesday, Laher was the last person to testify in the state’s capture investigation into the tender. The scandal-riddled deal has been at the center of irregularities that led to Transnet Engineering CEO Thamsanqa Jiyane and Transnet’s Freight Rail senior strategic sourcing manager to suspend Lindiwe Mdletshe in 2018.
‘We cannot evaluate this tender’
Laher told the investigation that the negotiation and evaluation team’s criteria required it to include hedging and escalation costs for tenders in its report.
He said that some bidders had provided their hedging and escalation costs, while others had not.
“Mr. Jiyane and Ms. Mdletshe were in charge of supply chain services. We went back to them to say ‘as a team, we cannot evaluate this tender from a pricing perspective because we cannot evaluate apples to apples. What do you want us to do? Do? ‘”Laher said.
He added that the team had wanted the bidders to clarify what those costs were, which would have been a fair way of doing the assessment.
According to Laher, the response was that they should continue evaluations without the costs, and Jiyane said asking bidders for clarification would give them room to change their prices or extend the time for evaluation and could create more ambiguity.
Laher also told the investigation that he had warned former Transnet CFO Anoj Singh that the budget for the deal would increase, but Singh had said that the bidders incorporated the risks into the contracts.
“The risks that we posed in that report were realized when the price was finally agreed,” he said.
The tenders for the locomotives were divided between General Electric, Canadian aircraft and the railway company Bombardier and CRRC-E Loco, a Chinese locomotive company.
Laher’s testimony in was part of his response to allegations of his involvement in the wrongdoing of former Transnet engineer Francis Callard, which he denied.
He will continue with his testimony on Thursday.
