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After Ramaphosa’s Transnet crisis meeting, Gordhan announces China visit to solve impasse

Following a high-level meeting between President Cyril Ramaphosa and Transnet officials, where the rail crisis was “sharply” addressed, Public Enterprises Minister Pravin Gordhan announced that he would travel to China next month to address the problems caused by a state-owned Chinese rail firm.

The State Capture Inquiry found that China Railway Rolling Stock Corporation paid billions in kickbacks to Gupta associates and was unfairly favoured in a R54 billion deal to supply Transnet with locomotives.

In July last year, its local subsidiary CRCC E-Loco failed in a court bid to have SARS return money taken from its accounts.

SARS froze the company’s accounts after finding that the company overstated the price of its locomotives sold to Transnet as part of its involvement in state capture, and that the company had a tax debt of more than R3.6 billion.

In apparent retaliation, CRRC – the world’s biggest rail equipment manufacturer – has refused to deliver locomotives and spare parts to Transnet.

This has severely throttled South Africa’s rail performance, with many locomotives out of service on key rail corridors for the export of coal and chrome.

“A key requirement for CRRC to continue doing business in South Africa is the normalisation of its relationship with key regulatory authorities – the South African Reserve Bank (SARB) and the South African Revenue Service (SARS). Up to now, the Chinese [company] has declined to do so,” Transnet said in a statement.

Gordhan will meet with his counterparts in the Chinese government as part of efforts to solve the impasse.

Transnet said in a statement that the declining performance of the freight rail division was addressed “sharply” during a meeting between Ramaphosa and key officials on Tuesday.

He “directed Transnet to implement reforms swiftly and completely to turn around the crisis in South Africa’s logistics system”.

*This story has been amended after Transnet corrected its statement to remove the impact on manganese exports. –