JOHANNESBURG: State-owned logistics group Transnet has secured a R30 billion loan from the China Development Bank (CDB) to pay for 232 diesel and 359 electric locomotives being built together with China South Rail and China North Rail.
Transnet will be drawing the first tranche of R18 billion over the next four years. The balance is subject to market conditions and funding requirements for the company's investment program.
Transnet is spending more than R337 billion over the next seven years on revamping its rail, ports and pipelines infrastructure. The majority of the infrastructure spend - some R210 billion - is for rail.
The loan between CDB and Transnet is part of a US$5 billion MoU between South Africa's president Jacob Zuma and his Chinese counterpart president Xi Jinping.
Transnet is required to repay the loan over 15 years after a period of four and a half years while the locomotives are under construction. The money represents 60 percent of over R50 billion required to acquire a total of 1,064 locomotives.
The acquisition is at the heart of a strategy aimed at increasing volumes while reducing the average age of the company's locomotive fleet. The program is designed to reinforce plans to grow traffic volumes from the current 210 million tons to over 350 million tons in the next seven years.