South African minister heads to China to resolve rail impasse

South African Public Enterprises Minister Pravin Gordhan will travel to China in April to discuss an impasse that’s blocked the delivery of locomotives and spare parts.

Gordhan will meet his Chinese counterpart to discuss the failure by a unit of state-owned CRRC Corp. to meet requirements set by South Africa’s central bank and tax authority, state-owned ports and rail company Transnet SOC Ltd. said in a statement Tuesday.

“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 and the South African Revenue Service,” it said. “Up to now, the Chinese original equipment manufacturer has declined to do so.”

Gordhan’s planned trip comes after President Cyril Ramaphosa highlighted the declining performance of Transnet’s freight-rail division as a constraint on South Africa’s economy, the company said.

Prior to the current impasse, Transnet’s relations with CRCC were strained because the South African company sought to cancel a 54 billion-rand ($3 billion) deal to buy as many as 1,064 locomotives from the Chinese firm and two other suppliers. CRCC hit back by withholding spare parts, forcing Transnet to withdraw more than 300 locomotives from service.