South African state-owned transport firm Transnet and China Development Bank (CDB) signed a loan facility agreement for the funding of hundreds of locomotives the company is building with China South Rail and China North Rail. The value of the agreement is R30billion (USD 2.47 billion) and is part of a bilateral memorandum of understanding between South Africa’s President Jacob Zuma and his Chinese counterpart President Xi Jinping.
The two heads of state signed a USD 5 billion MOU in December 2014, cementing bilateral relations between the two Brics partners. The proceeds of the loan will be used to fund the company’s 232 diesel and 359 electric locomotives it is building with CNR and CSR respectively.
The repayment term of the loan is fifteen years with a grace period of four and a half years,while the locomotives are under construction.
Including this agreement, Transnet has now secured 92% of the required funding for the acquisition of the 1064 locomotives.
Transnet will draw the second tranche of the loan subject to market conditions and funding
requirements, based on the projects included in the company’s R337 billion (USD 27.7 billion) investment programme.
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