Sustainability Report 2012 - Transnet

Economic dividends (continued)Local supplier industry developmentTransnet has the opportunity to accelerate South Africa’s economic transformation and support Government’sdevelopment goals through its Supplier Development (SD) programme. The aim is to address the negativeimpacts of the historical lack of investment in infrastructure which saw a significant decline in local industrywith a large proportion of the population being unable to participate meaningfully in the economy. Byleveraging our procurement spend, we aim to increase local content through the development of skills, jobcreation and technology transfer.Transnet’s focus on SD has intensified during the year. The majority of previous SD transactions were forrolling stock, mainly locomotives, in partnership with General Electric (GE), Electro-motive Diesels and Mitsui;but have been expanded to port operations with numerous transactions being concluded relating to porthandling equipment (STS cranes). Overall supplier development achievements include: In February 2011, Transnet signed an agreement with GE for the procurement of 100 locomotives – 10 ofwhich would be manufactured at GE’s plant in the United States with the remaining 90 being manufactured atRail Engineering’s Koedoespoort facility. Production is ongoing and on schedule with 27 locomotives alreadydelivered to Freight Rail. The agreement with GE reflects the alignment to the Department of PublicEnterprises (DPE) Competitive Supplier Development Programme (CSDP) with GE committing to stringentlocalisation, industrialisation, skills development, job creation/preservation and technology and intellectualproperty requirements.diesel-electric locomotives from GE’s local arm, General Electric South African Technologies (GESAT).The contract value is R968 million and contractual SD obligations negotiated amounted to R631 million whichequates to 65,0% of the contract value building on the 52,0% achieved in the previous contract.Transnet has progressed significantly in transforming its supplier base towards a Broad-based black economicempowerment (B-BBEE) supplier base.Actual black spend for the year ended 31 March 2012 amounts to R11,9 billion, which is 37,0% of the totalspend of R32,2 billion. 79,5% of actual black spend is allocated to Level 1 to 4 entities (2011/12: 57,0%) and8,4% to Levels 7 to 9 (2010/11: 26,7%), evidencing a clear shift of procurement spending to black owned andmanaged companies. In terms of the Department of Trade and Industry (DTI) Codes of Good Practice Transnet’sB-BBEE spend in 2011/12 is as follows:ROLLING STOCKLOCAL SUPPLIERTransnet’s total recognised B-BBEE spend per the DTI codesis R25,8 billion or 80,0% (2011/12: R19,4 billion or 75,0%),of total measurable procurement spend of R32,2 billion(2011/12: R25,7 billion).CONTRACTEDSINCE 2007DELIVERED TO DATER3 BILLION55,0%42