PRASA and Gibela conclude financial close of contract for the supply of commuter trains

The Passenger Rail Agency of South Africa and Gibela Rail Transportation  have  concluded the commercial close of the contract signed on the 14 October 2013 for the supply of 600 commuter trains (3,600 coaches) over the next 10 years.

As a consequence, the contract, which is worth R51 billion and includes the construction of a local train manufacturing plant – is in full force and effective from 26th April 2014. The manufacturing of the new train-sets can now commence with the first 20 trains to be manufactured in the Alstom Lapa (Brazil) plant. The first of these trains will arrive in South Africa in the fourth quarter of 2015.

In addition, Gibela will provide technical support to PRASA and the supply of spare parts over an 18-year period.

The R51 billion budget is subject to inflation and the foreign exchange adjustments based on the Euro/Rand movement.

“We are proud of successfully conducting one of the biggest railway procurement processes in the world”, said Mr Lucky Montana, PRASA Group CEO. “Thanks to this contract, over 3 000 new Metrorail coaches specifically designed for South Africa will soon replace the old generation with high standards of safety, reliability and comfort. This will substantially change the quality of passenger service in order to improve the daily journeys of more than 2 million South African people.”

According to Gibela CEO, Marc Granger, the company and its shareholders (Alstom and Black Economic Empowerment Equity Partners) are ready to start work on the project in South Africa and at the sites involved around the world.

“We are excited about reaching this significant milestone which paves the way to start with our industrialization efforts as required by this contract – which is part of a broader strategy to localise and to reinvigorate the railway sector in South Africa. To date, we have signed Letters of Intent with 35 suppliers for a wide range of components and raw material to be sourced from South Africa” explained Granger.

The Minister of Transport, Ms Dipuo Peters MP, congratulated PRASA on the work the agency has done as this would definitely ease congestion on our trains, ensure passenger comfort and, most importantly, replace the current Metrorail fleet which has reached the end of its design life.

Government is particularly pleased that the process was transparent, fair and competitive. The appointment of the probity officer was most certainly critical in ensuring that the entire transaction was above board.

“We are proud that finally the work of manufacturing the new trains will now start and the creation of much-needed jobs will commence,” Peters said.

PRASA will be supplied with the X’Trapolis Mega, the new X’Trapolis train developed by Alstom to fit South Africa’s 1.067 m gauge. The first 20 trains will be manufactured in the Alstom plant in Lapa, Brazil, which is one of Alstom’s competence centres for the production of stainless steel trains. More than 500 South African technicians, engineers and other professionals will be trained in the skills and competencies required to build and deliver modern trains of the standard of the X’Trapolis Mega.

Gibela will also build a R1 billion manufacturing site in Dunnottar, 10 km north of the town of Nigel, to produce the 580 trains which will be manufactured in South Africa. The 600,000 m2 manufacturing facility is also designed to house an engineering centre and training facility.

“South Africa has always had its own rail industry capacity but because of almost 35 years of under investment in the rail system, the engineering and design capability as well as the capacity to integrate have been lost. As we embarked on this programme, we wanted a technology partner; we wanted the trains to be built here and we wanted South African engineering firms as part of the global supply chain in the rail sector. It is very important for us that we have this factory established here”, said Montana.

Granger added: “From a site establishment perspective, we will be constructing a new factory and this will give us an opportunity to contribute to the creation of sustainable and enduring economic and social developments for the benefit of the people of South Africa.”

The project will create over 33 000 direct and indirect jobs over 10 years, achieving a local content level of over 65%. Gibela will train an estimated 19,000 people (artisans, technicians, train drivers and, among others, technologists) during the life of the project.