Makhosandile Zulu
2 minute read
27 Nov 2019
12:02 pm

Zondo hears more testimony on Transnet locomotives contract

Makhosandile Zulu

The witness says though there was a need for an increase in the cost of the controversial ‘1064 locomotives contract’ at Transnet, it should have been at 11% and not 41%, as was the case.

The commission of inquiry into state capture is on Wednesday hearing testimony from expert witness Alister Chabi who co-authored a report into Transnet’s acquisition of 100 and 1064 locomotives.

Chabi first took the witness stand at the commission on May 29 but his testimony was postponed.

Chabi told the commission that for compiling the report, Mncedisi Ndlovu & Sedumedi (MNS) attorneys had issued a mandate that the initial cost of the tender for acquiring the 1064 locomotives, which stood at R38.6 billion, should be validated and that the increase of the price of the tender to R54 billion should be assessed.

He added that the same had to be done with the acquisition of the 100 locomotives, but the initial cost of the tender did not need to be assessed, according to the mandate.

Chabi summarised the findings of the report ahead of the tea adjournment, saying the variables and assumptions of the initial cost of 1064 locomotives had no issues as it was an “acceptable price” and its estimated total cost (ETC) was “defensible”.

However, with regards to the increase of the cost of the tender from R38.6 billion, Chabi told the commission that though there was a need for an increase it should not have been “to the tune” of rocketing to R54 billion.

Chabi said the 41% increase was “too large” and that an 11% increase “would have been better”.

Moneyweb reported that it was in 2014 that Transnet’s former board approved the deal to buy locomotives from China South Rail, China North Rail, General Electric and Bombadier. At the time Brian Molefe and Anoj Singh were Group CEO and CFO at Transnet, respectively, while Siyabonga Gama was also an executive.

Costs around the contract spiralled from an estimated R38 billion in 2014 to more than R50 billion last year when Gama, who took over from Molefe as Group CEO in 2016, was fired. All three former executives have been implicated in state capture allegations at Transnet, while several other executives have either resigned or been suspended as investigations continue.

Chabi’s testimony continues, watch live courtesy of the SABC:

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