transnet local public procurement feedback:...
TRANSCRIPT
Transnet Local Public Procurement Feedback:
Portfolio Committee on Trade and Industry
September 2017
Background
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• In August 2016 Transnet, DTI, DPE, SABS and the OEM’s came to present tothe Portfolio Committee on the localization progress.
• At this meeting Transnet reported that local content documents for 1064locomotive build program have been submitted to DTI as required formonitoring and auditing by SABS;
• It was also reported that SABS were engaging OEMs regarding the monitoringand verification process. However, there was a challenge with regards to whoshould pay for the verification cost.
• Transnet continues to receive local content updates from OEMs whilst theyawait the local content audit.
There are a number of role players that drive localization through designatedsectors
CHALLENGES
Stakeholder Role
• Support localization, measure the impact• Engage the market to establish and drive
capability• Ensure capability within the market
• Issuer of designated sectors and instruction notes• Ensure development of industry
• Monitoring and auditing forum to establish real local content impact
• Deliverer of local content, utilizing procurement to deliver sustainable value to the local economy
• Demand driver, ensuring sustainability
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Transnet Rolling Stock - Locomotives
Locomotive
Business
KDS
Electric
CRRC E-Loco - 359
Diesel
GE - 233
DBN
Electric
BT - 240
Diesel
CRRC Dalian - 232
The 1064 Locomotives have been the only acquisition since the Rail Designations came into effect in 2012.
Transnet Rolling Stock - Locomotives
Note: TFR has not accepted locomotives on the following classesClass 23E Electric LocomotivesClass 45D Diesel Locomotives
No Description VolumeTotal Value
(Rb)
Unit Value
(Rm)Facility
1 Locomotives Build Project 1064 49 547.22R
Class 22E Electric Locomotives 359 18 122.32R 50.48R Koedoespoort
Class 23E Electric Locomotives 240 13 049.21R 54.37R Durban
Class 44D Diesel Locomotives 233 8 428.69R 36.17R Koedoespoort
Class 45D Diesel Locomotives 232 9 947.00R 42.88R Durban
2 Locomotives Assembled Domestically
Class 22E Electric Locomotives 116 5 855.68R 50.48R Koedoespoort
Class 23E Electric Locomotives 10 543.72R 54.37R Durban
Class 44D Diesel Locomotives 153 5 534.72R 36.17R Koedoespoort
Class 45D Diesel Locomotives 2 85.75R 42.88R Durban
3 Locomotives Imported
Class 22E Electric Locomotives 40 2 019.20R 50.48R China
Class 23E Electric Locomotives 0 -R 54.37R n/a
Class 44D Diesel Locomotives 6 217.05R 36.17R USA
Class 45D Diesel Locomotives 20 857.50R 42.88R China
Overall Local Content Target and Spend to Date
R 21 794,90 bn
R 4 119,20 bnR 3 366,61 bn
R 752,59 m
Total Local ContentTarget
Total Local Spendto Date
DesignatedComponents Spend
to Date
Other ComponentsSpend to Date
1064 Local ContentNotes:
• To date 269 of the 1064 locomotives have been accepted from 2 of the OEMs manufacturing at Koedoespoort.
• 12 locomotives are being tested for acceptance.
• The local content achievement by OEM’s is yet to be audited and verified by SABS.
Sub-Systems and Other Components
Assembly of Locomotives
Assembly of Locomotives
2 Car Body:
- Car body shell
- Door system
- Windows
- Seats (For coach interior)
- Lighting
- Grab pillars and rails
- Interior cladding
- Cable and wire
- Safety equipment
- Pipe works and ducts
3 Bogie:
- Bogie frame
- Motor suspension unit
- Wheel sets and wheel components
- Axle and axle boxes
- Bearings
- Bolster
4 Coupling Equipment :
- Coupler body
- Coupler hook
- Yoke
- Pin
- Draft-gear
1 Suspension :
- Shock absorbers and dampers
- Springs
6 Heat, Ventilation and Air Conditioning
- Fabrication
- Power Coating
- Heat Exchangers
- Fans
- Compressors
- Refrigeration components
- Electrical components
- Fasteners
- Insulation and liners
7 Braking System :
Braking System
8 Alternators :
Alternators
Traction Motors :
Traction Motors
Electric Systems :
Electric Systems
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DESIGNATED COMPONENTS
Local Suppliers
Local Suppliers
Local Suppliers
Local Suppliers
Wagons Rolling Stock
Impact of LC on Transnet Rolling Stock
Rolling Stock Classification
Manufactured Refurbishment
1064 – New BuildDetails covered in the presentation Not applicable at this stage
Legacy FleetWagons - New Build
Over 5 years useful life
• Locomotives were built / upgraded before LC requirements
• There are varying degrees of local content on the components that has been achieved
Scheduled• Applicable LC threshold may be achieved
due to predictable demand
Unscheduled• Industry may find it difficult to improve
on the current LC achieved due to the unpredictability demand
• Thus industry has been hesitant to invest
Less than 5 Years useful life
• These locomotives were build in the 1970’s
• There are varying degrees of local content on the components that has been achieved.
• The 43 class and the 20E locomotives acquired prior to the 1064 are currently under warranty and will be going into maintenance; they are therefore excluded from the refurbishments.
• This fleet is gradually being phased out as the new locomotives are being commissioned.
• Therefore minimum refurbishment / interventions re done on these locomotives
• Except where local capacity has already been established, there are no further opportunities for improvement as the locomotives are being phased out.
• See details on the next slide
Transnet Legacy Fleet
CHALLENGES
Fleet
PurchaseDate/UpgradeDate
AvAGE
20
17
/1
8
20
18
/1
9
20
19
/2
0
20
20
/2
1
20
21
/2
2
20
22
/2
3
20
23
/2
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B-Fleet Declaration
GE34D 1975 42180
150 104 50 25 0 0 Declare B-Fleet as at Apr 2019 - all major programstopped
GM34D 1975 42 81 50 25 0 0 0 0Declare B-Fleet as at Apr 2018- all major programstopped
7E 1978 39 0 0 0 0 0 0 0Declare B-Fleet as at Apr 2016- all major programstopped
7E1 1980 37 40 20 0 0 0 0 0Declare B-Fleet as at Apr 2016- all major programstopped
9E 1980 37 0 0 0 0 0 0 0 Fleet Staged
GM37D 1982 35 50 30 0 0 0 0 0Declare B-Fleet as at Apr 2017- all major programstopped
7E2 1982 35 20 0 0 0 0 0 0Declare B-Fleet as at Apr 2016- all major programstopped
7E3 1984 33 30 20 0 0 0 0 0Declare B-Fleet as at Apr 2016- all major programstopped
7E4 1984 33 10 10 0 0 0 0 0Declare B-Fleet as at Apr 2016- all major programstopped
8E 1984 33 15 0 0 0 0 0 0 Declare B-Fleet as at Apr 2015- all major programstopped
11E 1986 31 20 0 0 0 0 0 0Declare B-Fleet as at Apr 2016- all major programstopped
10E/10E2 198730 54 54 25 0 0 0 0
Declare B-Fleet as at Apr 2016- all major programstopped
10E1 198928 80 80 50 20 0 0 0
Declare B-Fleet as at Apr 2016- all major programstopped
38EDE 1993 24 10 6 0 0 0 0 0Declare B-Fleet as at Apr 2017- all major programstopped
18E 2007 10 650 650 600 550 500 450 400Declare portion as B-Fleet as at Apr 2020- all major program stopped
NB: though the 18E is on the green legacy fleet, it will be gradually phased out once the new BT locomotives are being bought in service
View of the Wagon
CHALLENGES
Tank Barrel Plates
Bogie Wheels & Casting
Flexible Brake Hoses:
Steel Brake Pipes: TE fabrication
Brake Valve
Quick Release Mechanism
Slack Adjuster
Brake CylinderCouplers: TE Foundry
Yokes: TE Foundry
Yokes: Internal Foundry
Tank Frame Plates
Charge and Discharge valves
Safety Relive Valve
Vacuum Cylinders
Draft Gear Drawgear
Coating
Bogie Wheel Bearings
Bogie Springs: TE fabrication
Transnet’s wagon localisation with local suppliers: Bogies
Component Supplier Local content per DTI requirement Current Local content achieved as per Supplier’s report
Bogies
• Wheels • 34” Cast –SCAW
• 34” Forged -Naledi
• Cast - 100%• Forged – Not designated at the time
of the award
• 100%
• Forged – Supplier is setting up a wheel machining plant in SA, with the intention to localise a forge over the contract period
• Bogie cast components
• SCAW
• CSR
• 100%
• 100% by Jan 2018
• 100%
• Supplier raised concern about low demand
• Axels • Swasap • 100% • 100%
• Bearings • Reelin• Timken
• 100% with the exemption• 100%
• 100% with the exemption
• 100% with the exemption
Transnet’s wagon localisation with local suppliers: Body & Braking System
Component Suppliers Local content per DTI requirement Current Local content achieved as per Supplier’s report
Body
• Steel • Macsteel• Aveng Trident• BBD• Qinisa Steel• Allied Steel
• Primary Steel deemed local at the time of award
• Since 2012, primary steel was deemed local at the time of going to tender,
• however the suppliers are currently procuring from the local steel mill
Braking system
• Brake valves • Knorr Bremse • 70% • 70% Target LC achieved
• Slack Adjusters• Knorr Bremse
• 70% • 70% Target LC achieved• Current global market is very limited number
of AAR approved suppliers
• Brake blocks • DCD Metpro• Federal Mogul
• 70% • 70% Target LC achieved• Limited scope for further localisation due to
limited demand to sustain suppliers
Transnet’s wagon localisation with local suppliers: Coupling Equipment
Component Supplier Local content per DTI requirement Current Local content achieved as perSupplier’s report
Coupling equipment
• Draw gear • Miner Enterprises • 100% • 30% of the draw gear is composed of rubber pads which have been localised
• Miner has localisation plans with a local partner in two years.
• Couplers,knuckles, pins & yolks
• Scaw
• Benkling
• 100%
• 100%
• 100%
• Benkling is currently 0%, no purchasing activity from TE
• Foundry technology is being developed to increase capability and capacity to produce more local components
Impact of current economic conditions on localisation
CHALLENGES
National Treasury issued Instruction Note on local content during the 2012/13 financial year
Prior to that TE had contracted suppliers on the various designated commodities and most of the contracts expired between 2013 - 2015.
TE subsequently issued and awarded several long term High Value Tenders (HTVs) to the open market on designated items i.e. bearing, axles, couplers, wheels, etc.
At the time of issuing these components, TE had forecasted demand driven mainly by the wagon build programme at the time.
Since then Transnet Engineering wagon build programme has significantly reduced as depicted in the graph below:
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3427
4085
3114
2100
100
3284
2527
33263692
4119
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2012 / 2013 2013 / 2014 2014 / 2015 2015 / 2016 2016 / 2017
Actual Number of Wagons Build
Forecasted Number Wagons
Impact of current economic conditions on localisation
Transnet Engineering enters into as and when contracts based on demand.
The reduction in demand for wagons translated into a low demand for the components related to these long term contracts entered into.
This has negatively impacted on anticipated localization deliverables.
TE has been aggressively going into the market to source more business however the impact caused by the economic drought impacts directly on the planned wagon build programme which has reduced demand.
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