JOHANNESBURG, SA: Transnet, South Africa's rail company, has received a $500 million U.S./Exim bank guarantee to finance 293 locomotives being built by General Electric and US$440 million from Export Development Canada to finance engines currently being built by Bombardier.

Last year Transnet announced a US$4.2 billion contract with four manufacturers to supply 1,064 diesel and electric locomotives as part of the largest rail recapitalization program in South Africa's history.

Bombardier Transportation and China South Rail Zhuzhou Electric Locomotive are currently building 599 electric units – the first of which is scheduled to be rolled out in March; while GE and China North Rail Rolling Stock are constructing 465 diesel engines for a first roll-out in July this year.

The contract, which requires 60 percent local content, is being fulfilled at Transnet facilities in Durban and Pretoria.

According to Brian Molefe, Transnet CEO, the order "is critical in our pursuit of the crucial goal of migrating rail-friendly cargo off our roads. It will mean fewer trucks on our roads".

Transnet plans to invest over US$25.35 billion between 2012 and 2019 in a rail modernization program with 66 percent of the funds generated from income and the remainder from international capital markets. According to Molefe, none of the borrowings will be guaranteed by South Africa.