WHY WE CANCELLED THE TENDER FOR 212 DIESEL LOCOMOTIVES

March 5 2009

Embargo: none

Transnet Limited terminated sometime ago a tender for the acquisition of 212 diesel locomotives after investigations revealed procedural irregularities that would have made it unlawful to award the tender.

Whilst the effects of the economic downturn on rail volumes – particularly in Freight Rail’s general freight business – have impacted on the locomotive acquisition strategy, it remains the intention of the Company to re-issue the tender for the supply of 212 and, most probably, a higher quantity than this in the future based on operational requirements.

Our decision to withdraw the 212 tender was not taken lightly.The advice from two leading senior counsel and the findings of forensic advisors (Ernst & Young) who investigated our underlying concerns regarding the tender process in question was followed in reaching our decision. The decision was also part of a series of corrective steps, including a review of our procurement processes, that we took in a bid to prevent a similar occurrence. Further recommendations of the forensic advisors arising out of the probe are being implemented.

In discharging our responsibility in terms of the Public Finance Management Act, it is vitally important that our tender processes are fair, equitable, transparent and cost- effective to ensure that all stakeholders have the required level of confidence in our procurement processes.

Meantime though, we have issued a tender for the quick delivery of 100 locomotives. This tender, which is separate and distinct from the 212, closes on March 10 2009.

Late last month, Transnet received court documents from Electro-Motive Sibanye Joint Venture, one of the tenderers in the withdrawn 212 process, in which the consortium sought an urgent interdict preventing Transnet from going ahead with the awarding of the separate, distinct and subsequent tender for 100 locomotives.

We have filed an answering affidavit at the Johannesburg High Court in response to the interdict. And, today we will be vigorously defending the court challenge at the High Court as part of our commitment to the highest standards of corporate ethics and governance. The interdict has no basis – the 100 tender is distinct from the 212.

As the matter is now before the courts, we will not be issuing further statements nor commenting whilst this process is ongoing.

Issued by:

John Dludlu

Spokesman

083676 1881

083277 4774