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By Loyiso Sidimba 
Oct 21, 2020
A TRANSNET executive told the state seizure inquiry commission on Wednesday that it took him by surprise that the entity bought 100 locomotives while it was busy negotiating a deal with source 1064.
Yousuf Laher, executive manager responsible for company-wide business services in Transnet Freight Rail’s finance department, said he was informed by former CFO of the state rail, logistics, ports and pipeline company Anoj Singh that Transnet had decided to limit the supply of 100 electrical units. locomotives to China South Rail (CSR).
At Transnet, lockdown is a process where other procurement mechanisms would not be practical due to urgency, limited market, or single source provider and then goods or services are limited to one or a limited number of bidders.
“At that point it took me completely by surprise because we were involved in the 1064 negotiations. I wonder why we need 100 additional locomotives, but in any case he said it was approved by the board, we need 100 additional locomotives, it has been limited to CSR”, Laher recalled Singh briefing him.
He said that while they were busy negotiating the deal to award the 1064 locomotives, Singh asked him to prepare a reasonableness calculation for the 100 locomotives.
According to Laher, he did his calculations and came to the conclusion that each locomotive cost 41 million rand, which he presented to Singh and former Transnet Freight Rail procurement director Thamsanqa Jiyane as a benchmark for negotiations.
During negotiations, Jiyane presented Transnet’s offer at R38.5m but CSR disagreed and demanded a price of R49m.
Laher said Singh arrived a day or two later and said then-CEO Brian Molefe approved a price of R44m for the locomotives.
“Obviously, there must have been some other negotiations in the background,” he said.
Laher told Singh that the locomotives made by the Japanese railway rolling stock leasing company Mitsui were cheaper, but they informed him that this did not matter as Transnet had appointed CSR as the deal had already been approved by the board. .
He said Molefe also approved the CSR payment terms and instructed the lawyers to draft the contract accordingly.
“I raised with the bidders that in my opinion the price was excessive and too high and that they were using incorrect exchange rates to determine their prices,” he said.
Laher also pointed out that the use of incorrect exchange rates for Singh and as a result CSR was adding R2.4m per locomotive to the price.
Political Bureau
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