Friday, October 23, 2020

Minister conceals BR locomotives scandal

In a curious turn of events, it has emerged that Minister of Transport and Communications Tshenolo Mabeo withheld vital information when he publicly stated that government only bought passenger coaches and not locomotives.

Sunday Standard investigations have turned up information that contrary to the minister’s statement, Botswana Railways has paid an American company, Electro-Motive Diesel Inc, a deposit of USD 16,713,020.96 for the supply of 8 (eight) new locomotives, model GT42AC,  which the company is refusing to deliver because Botswana Railways has not fulfilled some of its contractual obligations. 

In an attempt at damage, Minister Mabeo on Wednesday March 30, gathered journalists to his office boardroom for an update on the troubled BR Express and to “set the record straight” on some of the allegations pertaining to the acquisition of the coaches by the Botswana Railways (BR). At the media briefing, Mabeo told members of the press that government did not buy locomotives (powered railway vehicles used for pulling trains) but rather, they had only bought passenger coaches.

Sunday Standard, however has in its possession a letter to Bank ABC, dated September 11, 2015 and co-signed by BR Chief Executive Officer Dominic Ntwaagae and BR Director of Finance Mao Segage, instructing the bank to pay USD 16,713,020.96 into the bank account of Electro-Motive Diesel Inc. from the funds available in the Botswana Railways USD account number 1001957390201 held with Banc ABC.

 In the same letter, the two BR executives informed the bank that the money is “an advance payment towards the procurement of 8 (eight) new locomotives”. The banking details of the Chicago-based company are also included in the letter for the bank’s “ease of reference”. Electro-Motive Diesel Inc, which is the world’s largest builder of diesel-electric locomotives for all commercial railroad applications, got the tender (TC 1048-12/13 20138952) in June 2014 following BR’s issuance for call to tender for the supply of eight diesel-electric locomotives which was published in the International Railway Journal. The closing date for tenders was September 2, 2013. The USD 16,713,020.96 payment was fifty percent (50%) of the total contract price which stood at USD 33,426,041.91. In addition to the supply of eight locomotives, Electro-Motive Diesel Inc. was also contracted to provide training to BR Staff at Mahalapye for USD200, 000.00, provide Service for USD 1,300,000.00. They were also engaged to supply consumable parts at USD 724,397.12, one set of Protective parts at USD 2,117,063.46 and one set of tools at USD 424,581.33.

According to the International Railway Journal, Electro-Motive Diesel Inc. received orders from Africa that included GT42AC units for Botswana Railways (BR); 13 GT38 LC-3s for Tanzania Railways, which will be assembled by DCD in South Africa; 12-15 GT46ACs for Gabon; and an as yet unspecified number of GT38ACs for CFCO in Congo. The company has increased its activities in the African market in recent years, securing an order for 50 2.46MW class 39.200 locomotives for Transnet Freight Rail in South Africa and upgrading class BD-2 diesels for BR.

Sunday Standard is in possession of the contract between Botswana Railways and Electro-Motive Diesel Inc. and according to the contract’s payment schedule, the payment of the balance of the total contract price was to be made to the manufacturer in United States Dollars upon issuance of the Final Acceptance Certificate under the Letter of Credit, upon presentation by the manufacturer to the Confirming Bank in accordance with clause 15.3 of Agreement.

The bank, however, will not settle the balance because the manufacturer won’t release invoices for the Bill of lading, the commercial invoice, the packaging list, the certificate of insurance, the factory acceptance certificate, the provisional acceptance certificates and the final acceptance certificates. While it is unclear if BR has given up on fulfilling their contractual obligation, reports from within BR indicate that the parastatal organisation risks forfeiting their USD 16,713,020.96 contractual down payment to the American company. Faced with this quandary, BR decided to look elsewhere and pumped more money on engaging a South African company, Grinrod Locomotives (PTY) LTD to refurbish two of their older locomotives at a total cost of R71, 079,150.00. This was done in November last year. According to the contract (BD Modernisation: Contract BRC099), the two locomotives, with registrations BDD333 and BDD335, were each fitted with new set of wheels and checked for any exterior and interior signs of damage or abnormalities. Sunday Standard has documents that show how Grinrod had to import major components such as radiators and alternators from an American company, National Railway Equipment Company. Botswana Railways was then made to pay R28, 431,820.00 for shipment of these major components. BR paid another R28, 431,820.00 which was stated as payment for “contract signing”. For the final assembly of the two locomotives, BR parted with R14, 215,510.00. Botswana Railways suffered another blow on Thursday when one of their older locomotives caught fire in the engine compartment near Ramotswa.

BR Corporate Communications Manager Kebabonye Morewagae confirmed Friday evening that the tender was awarded to Electro-Motive Diesel in June 2015. He said they expect the locomotives to be delivered mid-2017 but would not entertain any other questions relating to the tender.

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