C O M M I S S I O N O F I N Q U I RY I N TO S TAT E C A P T U R E
H E L D AT
PA R K TO W N , J O H A N N E S B U R G

10

2 0 M AY 2 0 1 9

D AY 9 6

20

20 MAY 2019 – DAY 96
P R O C E E D I N G S H E L D O N 2 0 M AY 2 0 1 9
C H A I R P E R S O N : G o o d m o r n i n g M s S e l l o , g o o d m o r n i n g e v e r y b o d y.
A D V M A H L A P E S E L L O : G o o d m o r n i n g C h a ir.
C H A I R P E R S O N : T h a n k y o u . G o o d m o r n in g Mr C a ll a r d .
M R F R A N C I S Q U E N T I N C A L LA R D : G o o d m o r n in g C h a ir.
C H A I R P E R S O N : T h a n k y o u . Ar e y o u r e a d y ?
A D V M A H L A P E S E L L O : W e a r e r e a d y C h a ir.
CHAIRPERSON : Thank you.
A D V M A H L A P E S E L L O : C h a ir w h e n – w h e n w e b r o k e o n F r i d a y w e h a d
10

g o n e u p to p a g e 1 5 p a r a g r a p h 6 3 . Ar e y o u th e r e Mr C a l la r d ?
M R F R A N C I S Q U E N T I N C A L LA R D : I a m t h e r e .
A D V M A H L A P E S E L L O : A n d w e h a d g o n e th r o u g h t h e u p fr o n t p a y m e n t
o f R 7 . 3 7 b il li o n r e q u ir e d f o r t h e v a r io u s l o c o m o ti v e s o n t h e b a s is t h a t
t h e y h a d t o h a p p e n i n t h a t p a r t ic u l a r fi n a n c i a l y e a r. W e m o v e t h e n Mr
C a ll a r d t o y o u r p a r a g r a p h 6 4 a n d w e s t a r t a t 6 4 o n th e in c r e a s e in t h e
e s ti m a t e d t o ta l c o s t . C o u l d y o u t a k e t h e C h a ir t h r o u g h y o u r p a r a g r a p h
6 4 a n d f o l lo w in g ?
M R F R A N C I S Q U E N T I N C A L L A R D : T h a n k y o u . I t w a s o n th e 1 5 A p r i l
t h a t I w a s a s k e d b y Mr L e h e r t o a s s i s t i n u p d a te d a m e m o r a n d u m fr o m

20

M r M o le f e t o t h e B A D C t h e B o a r d A c q u i s i t io n a n d D is p o s a ls C o m m i t t e e
o n a n i n c r e a s e in th e e s t i m a t e d to t a l c o s t f o r t h e a c q u is it i o n o f th e 1 0 0
21

E L o c o m o t iv e s .

He g ave

me

a

m e m o r a n d u m r e q u e s t in g

a

r e c o m m e n d a ti o n b y B A D C t o t h e b o a r d f o r a n in c r e a s e i n t h e e s ti m a t e d
t o t a l c o s t o f t h e 1 0 0 lo c o m o t iv e s fr o m R 3 . 8 7 1 b il li o n t o R 4 . 8 4 0 b i lli o n .
T h i s w a s a n i n c r e a s e o f a p p r o x i m a t e ly R 1 b il li o n o r 2 5 % .

Page 2 of 247

May I take

20 MAY 2019 – DAY 96
y o u t o th a t m e m o r a n d u m w h i c h is o n A n n e x u r e s 1 8 , 1 8 A p a g e 2 8 4 .
ADV MAHLAPE SELLO: Of…
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.
ADV MAHLAPE SELLO: BB4[a].
CHAIRPERSON : Is it the same bundle?
A D V M A H LA P E S E L L O :

I t is th e s a m e – t h e f ir s t b u n d l e .

Ye s C h a i r

same.
CHAIRPERSON : What page?
M R F R A N C I S Q U E N T I N C A L LA R D : 2 8 4 .
10

CHAIRPERSON : Thank you.
A D V M A H L A P E S E L L O : A n d t h a t is A n n e x u r e 1 8 A w h ic h s t a r ts o n 2 8 1 .
Yo u w a n t u s t o h a v e p a r t ic u l a r …
C H A I R P E R S O N : W h a t is t h e d iv i d e r ? W h a t is t h e d i v i d e r n u m b e r ?
A D V M A H L A P E S E L L O : I t i s d iv id e r 1 8 C h a ir. U n d e r 1 8 th e r e a r e 2 .
T h e r e is 1 8 a n d th e r e – 1 8 A s ta r t in g a t 2 8 1 . S o a t 2 8 1 t h a t is w h e r e
t h e a n n e x u r e s s t a r ts .
C H A I R P E R S O N : Ye s .
A D V M A H LA P E S E L L O : M r C a l l a r d y o u s p e c i fi c a ll y w a n t u s t o t u r n o u r
a tt e n ti o n t o p a g e 2 8 4 ?

20

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . 2 8 4 o f t h e m e m o r a n d u m .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

D e t a i ls a t a b l e – ta b le 2 w h ic h

r e fl e c ts h o w t h e in c r e a s e is m a d e u p .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : It i s c o m p l i m e n te d fr o m t a b le 2 i f I

Page 3 of 247

20 MAY 2019 – DAY 96
m a y d r a w y o u r a t te n ti o n p le a s e t o 2 8 5 .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

At paragraph 14 on page 285

w h e r e th e fi n a l a m o u n t i s g iv e n a s R 4 . 8 4 0 b i ll io n o r R 4 8 4 0 m il li o n .
ADV MAHLAPE SELLO:

S o i t is t h e – t a b le 2 i n d ic a te s fo r u s th e

in c r e a s e fr o m 3 .8 t o 4 . 8 ?
MR FRANCIS QUENTIN CALLARD:

To t a b l e 2 g iv e s u s t h e i n c r e a s e

fr o m R 3 . 8 t o R 4 – i t s a y s t h e r e R 4 4 m il li o n p e r l o c o m o ti v e b u t t h e n
a d d e d t o t h a t i s w e h a v e a – a n a d d it i o n a l d i ff e r e n c e w h ic h c o m e s o u t
10

o n p a r a g r a p h 1 4 o f p a g e 2 8 5 a n d t h e a s t e r is k p o i n t t h e r e i s 1 0 % i s
a d d e d fo r o p ti o n s , v a r i a t i o n o r d e r s , s p e c ia l t o o li n g , te s t e q u i p m e n t ,
in it i a l s p a r e s a n d c a p i ta l s p a r e s .
ADV

M A H LA P E

SELLO:

So

Mr

Laher

provided

you

with

t h is

m e m o r a n d u m w i th a r e q u e s t – w it h a r e q u e s t t o u p d a t e t h e N P V ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

In r e s p e c t o f t h e a c q u is i t io n o f t h e s e

lo c o m o t iv e s , d i d y o u ?
MR FRANCIS QUENTIN CALLARD:

Ye s i n t h e m i d d l e o f p a g e 2 8 5 a t

the – under paragraph 12 he writes:
20

“ T h a t t h e N P V w o u ld b e c o m e a n e g a t iv e X X b il li o n a t
t h e o r i g in a l h u r d l e r a t e o f 1 8 . 5 6 % Fr a n c i s C a ll a r d t o
p r o v i d e u p d a t e d c a lc u l a ti o n s .”
A n d t h a t w a s t h e w o r k t h a t I d id o n t h is m e m o r a n d u m .
C H A I R P E R S O N : N o w o n p a g e 2 8 5 y o u h a v e g o t t h a t X X b i ll io n r a n d s –
h a v e y o u g o t th e a c t u a l f i g u r e s n o w o r n o t r e a l ly ?

Page 4 of 247

20 MAY 2019 – DAY 96
MR FRANCIS QU ENTIN CALLARD:

M r C h a ir I d i d n o t b r i n g th o s e

fi g u r e s o r e v e n p u t t h e m i n m y s t a t e m e n t a s th a t w a s j u s t e s s e n ti a l
work done.

M y s t a te m e n t w a s r e l a t e d m o r e t o t h e a s p e c t t h a t I w a s

s u r p r is e d a t t h e m a k e u p o f t h e fi g u r e s o f t a b le 2 a n d t h e fi n a l p r ic e o f
R 4 . 4 b il li o n .
CHAIRPERSON :
paragraph

that

O h o k a y n o I j u s t s a w t h a t a t t h e e n d o f th a t
you

have

read

says

you

w i ll

provide

u p d a te d

c a l c u l a ti o n s s o I th o u g h t a t t h e ti m e o f p r e p a r in g t h is s ta t e m e n t m a y b e
t h o s e c a lc u la t io n s w e r e n o t a v a il a b l e a n d t h a t y o u m i g h t b e h a v i n g
10

t h e m n o w. B u t y o u s a y y o u d o n o t h a v e t h e m ?
MR FRANCIS QUENTIN CALLARD:

I p r o v i d e d t h o s e c a lc u l a ti o n s .

T h o s e s h o w e d a c h a n g e in t h e n e t t p r e s e n t v a l u e o f th e p r o j e c t .
C H A I R P E R S O N : Ye s .
MR FRANCIS QUENTIN CALLARD:

W h i c h c h a n g e d b e c a u s e o f th e

in c r e a s e in p r ic e th e lo c o m o t iv e s t h e n e t t p r e s e n t v a l u e r e d u c e d
m a r g in a l ly b u t it w a s n o t s u c h to n e g a t e t h e p r o je c t .
CHAIRPERSON :

H m o k a y. A n d o n p a g e 2 8 4 y o u h a v e g o t t h a t 4 4 –

y o u s a i d th a t 4 4 o n ta b le 2 a t t h e e n d t h a t t o t a l is R 4 4 m ill i o n p e r
lo c o m o t iv e ?
20

M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
C H A I R P E R S O N : A n d – a n d y o u m u l t ip ly t h a t b y …
M R F R A N C I S Q U E N T I N C A L LA R D : B Y 1 0 0
C H A I R P E R S O N : B y t h e n u m b e r o f t h e l o c o m o ti v e s to a r r iv e a t t h e – a t
the total increased amount.
M R F R A N C I S Q U E N T IN C A L LA R D : C o r r e c t . T h a t i s s o . Ta k i n g t h e 4 4

Page 5 of 247

20 MAY 2019 – DAY 96
m il li o n p e r l o c o m o ti v e ti m e s b y 1 0 0 l o c o m o t iv e s g iv e s u s t h e 4 . 4
b i ll io n .
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D :

A n d t h a t 4 .4 b i lli o n w a s a n 8 %

g iv e s u s t h e f ig u r e o f 4 .8 4 0 a t – a s t h e c o n tr a c t e d p r i c e o n p a g e 2 8 5 .
C H A I R P E R S O N : O k a y th a n k y o u .
A D V M A H LA P E S E L L O :

Thank you.

M r C a ll a r d t h e – y o u r A n n e x u r e

1 8 A w h ic h is t h e d o c u m e n t w e a r e c o n s i d e r i n g is t h e m e m o r a n d u m a s
r e c e i v e d b y y o u fr o m M r L a h e r ?
10

M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t t h a t i s c o r r e c t .
A D V M A H L A P E S E L L O : Yo u i n d i c a t e d y o u r p a r a g r a p h 6 6 y o u e x p r e s s
a v i e w th a t y o u c o n s i d e r e d t h e in c r e a s e e x c e s s i v e a n d d i ff ic u l t to
ju s t i fy.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : C o u l d y o u e x p l a i n w h y t h a t is s o ?
MR FRANCIS QUENTIN CALLARD:

C e r t a i n ly.

O n t h e fir s t li n e th e

p r i c e p e r l o c o m o t iv e a s p e r t h e b o a r d ’s s u b m i s s i o n o f t h e 3 1 J a n u a r y
34.34 that…
ADV MAHLAPE SELL O : Please just a second Mr Callard.
20

C H A I R P E R S O N : J a I th in k y o u m u s t j u s t a l e r t u s w h e n y o u m o v e fr o m
t h e a n n e x u r e s to t h e s ta t e m e n t.
A D V M A H LA P E S E L L O :

O h a p o l o g i e s S i r I – a t h is p a r a g r a p h 6 6 o f

t h e s t a te m e n t . I a p o l o g is e .
C H A I R P E R S O N : J a o k a y.
A D V M A H L A P E S E L L O : I t is a t p a g e 1 5 , 1 5 . S o a t – y e s . A t 6 6 t h e

Page 6 of 247

20 MAY 2019 – DAY 96
C h a ir w il l n o t e t h a t M r C a ll a r d s ta t e s ;
“In my view the increase was excessive and was
d i ff ic u l t to ju s t i fy.”
A n d t h a t is t h e in c r e a s e t h a t i s r e f le c t e d in t h e – a t p a g e 2 8 4 o f
A n n e x u r e 1 8 A . My q u e s t i o n t o Mr C a ll a r d i s w h y h e f o r ms t h a t v i e w ?
M R F R A N C I S Q U E N T I N C A L L A R D : T h a n k y o u . I fo r m e d t h a t v ie w w i t h
r e fe r e n c e t o l in e 2 o f t a b l e 2 w h i c h w a s t h e i m p a c t o f th e e x c h a n g e r a te
t o c o n tr a c t v a lu e .

O n th e t a b l e i t i s i n d ic a te d a s 3 .6 9 m i ll io n p e r

lo c o m o t iv e . G iv e n t h e s h o r t p e r i o d o f t h e ti m e b e t w e e n a s k i n g f o r t h is
10

q u o t a t i o n t o t h e t i m e o f a w a r d I b e l i e v e d t h a t i m p a c te d e x c h a n g e r a te
t o b e e x c e s s iv e I c o u l d n o t s e e a n i m m e d i a t e j u s ti f ic a ti o n f o r t h a t
in c r e a s e .
A D V M A H L A P E S E L L O : J u s t – I a p o l o g is e M r C a l la r d . C h a ir i f w e g o
t o p a g e 2 8 4 . T h e ta b le 2 th a t M r C a ll a r d r e fe r r e d u s t o h e is d e a l i n g
w i t h th a t – w i t h th e it e m s a t ta b le 2 t o e x p r e s s a v i e w o n w h e t h e r o r n o t
t h e y a r e e x c e s s iv e u n d e r t h e c ir c u m s t a n c e s o r w h e th e r t o – w h e t h e r
t h e r e is a b a s e – t h e r e i s a b a s is t o j u s ti fy t h a t i n c r e a s e .

S o I w ill

r e q u e s t t h e C h a ir to k e e p h i s f i n g e r a t 2 8 4 .
CHAIRPERSON : Ja.
20

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

W h i c h is th e ta b le th a t Mr C a l la r d i s d e a li n g

with.
CHAIRPERSON : Thank you.
ADV MAHLAPE SELLO:

M r C a l l a r d y o u h a v e – t a b l e 2 in d i c a t e s a

p r i c e p e r lo c o m o t iv e a s p e r b o a r d s u b mi s s i o n o f 2 1 J a n u a r y 2 0 1 4 o f

Page 7 of 247

20 MAY 2019 – DAY 96
3 4 . 3 4 m i ll i o n .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

Yo u h a v e ju s t s p o k e n t o th e i m p a c t o f t h e

e x c h a n g e r a t e to c o n tr a c t d a t e r e s u l ti n g i n a n in c r e a s e o f 3 . 6 9 m i ll io n .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

Please recap because I unfortunately had to

in t e r r u p t y o u to a s s is t th e C h a ir t o l o c a t e t h e p a g e – t h e t a b l e .
M R F R A N C I S Q U E N T I N C A L L A R D : C e r t a i n ly. O n t h e p r e m is e t h a t t h e
i m p o r t e d c o m p o n e n t o f a l o c o m o ti v e o f t h is n a t u r e is a t t h e o r d e r o f
10

4 0 % . I f o n e w e r e t o ta k e 4 0 % o f th e 3 4 . 3 4 m i ll io n o v e r t h e r e l a tiv e l y
s h o r t p e r i o d w i t h t h e m o v e m e n t o f th e e x c h a n g e r a te t h e 3 . 6 9 a t fi r s t
g l a n c e w a s e x c e s s iv e a n d th a t w a s c e r t a in ly w h a t i t a p p e a r e d t o m e .
ADV MAHLAPE SELLO:

W o u ld w e b e c o r r e c t t h e n to s a y t h a t y o u

w o u ld h a v e e x p e c t e d a n i m p a c t o f t h e e x c h a n g e r a t e w h a t y o u a r e
q u e s t io n in g i s t h e v a l u e ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h e q u a n t u m t h e x r a t e .
A D V M A H L A P E S E L L O : Th e q u a n tu m t h a t i s r e f le c t e d th e r e ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO: It is too…
20

M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : I t i s e x c e s s iv e i n y o u r v ie w ?
MR FRANCIS QUENTIN CALLARD:

M y is s u e w a s n o t w it h t h e li n e

it e m s .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D : P e r s e b u t m o r e w it h t h e i m p a c t o f

Page 8 of 247

20 MAY 2019 – DAY 96
s o m e o f t h e li n e i t e ms .
ADV MAHLAPE SELLO:

Understood.

in fl a ti o n u p t o c o n tr a c t d a t e .

Th e n e x t o n e i s i m p a c t o f

Do you have a view on that?

The

q u a n tu m o f 1 .2 6 ?
M R F R A N C I S Q U E N T I N C A L L A R D : I h a v e n o v i e w o n t h a t . I t is j u s t
p e r h a p s i n l in e m i g h t e v e n b e c o n s e r v a t iv e .
A D V M A H L A P E S E L L O : A n y t h i n g e ls e o n t h e l i n e it e m s th a t y o u w o u ld
lik e to d r a w t h e C h a ir ’s a t t e n t io n to ?
M R F R A N C I S Q U E N T I N C A L L A R D : C e r t a in ly a n d y e s t h a n k y o u . Th e
10

o th e r li n e it e m , a d d i t io n a l c o s ts f o r v a r ia ti o n s / d u ti e s o f t h e 3 .4 7
m il li o n t h a t i n o u r o r i g i n a l s u b m is s io n w a s a lr e a d y b u i l t in t o t h e 3 4 . 3 4
m il li o n . Th a t fa c to r w a s a lr e a d y i n c lu d e d in t h e 3 4 . 3 4 m il li o n w h e n w e
d i d t h e i n i t ia l b u s i n e s s c a s e a s b e i n g t h e t o t a l d e li v e r e d p r ic e o f t h e
lo c o m o t iv e .

T h is w a s n o t m e a n t to b e a n a d d i ti o n in o u r o r i g i n a l

business case.
A D V M A H L A P E S E L L O : S o w h e r e a s w i th li n e i t e m 1 y o u m a y q u e s t io n
t h e q u a n t u m i n s o fa r a s a d d i t io n a l c o s t f o r v a r ia t io n / d u ti e s is
c o n c e r n e d y o u q u e s t io n t h e l in e it e m i ts e l f i n i ts e n t ir e ty t h a t i t s h o u ld
n o t h a v e b e e n p a r t o f th e c a lc u l a ti o n t o i n c r e a s e f r o m t h e 3 4 . 3 4
20

m il li o n ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELL O : Is that the correct understanding?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

Thank you.

A n y o t h e r i s s u e y o u w o u l d lik e

d r a w t h e C h a ir ’s a t t e n t io n to a t t a b l e 2 ?

Page 9 of 247

20 MAY 2019 – DAY 96
MR FRANCIS QUENTIN CALLARD :

Ye s if I m a y th e n g o t o t h e n e x t

li n e it e m w h i c h is th e c o s t t o f ix fo r w a r d e s c a l a ti o n .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

A t – g i v e n o n th a t t a b l e a t 4 . 6 3

m il li o n m y c u r s o r y v ie w is th a t t h a t w a s o v e r a t w o y e a r d e liv e r y p e r i o d
o f t h e l o c o m o t iv e s b e a r i n g in m i n d i t w a s to b e f a ir ly q u i c k d e liv e r y
o v e r a tw o y e a r p e r i o d fo r C P I a t 6 % o r 7 % e v e n t h a t w a s e x c e s s iv e i n
r e l a ti o n to t h e l o c a l c o n te n t th e 6 0 % l o c a l c o n te n t o f t h e l o c o m o ti v e o f
t h e 3 4 . 3 4 . In e s s e n c e 3 4 . 3 4 6 0 % o f t h a t w o u l d b e a r o u n d 2 0 mi ll i o n f o r
10

example.

C P I o v e r 2 0 m il li o n f o r t w o y e a r s a t e v e n a t 6 % p e r y e a r

w o u ld g iv e o n e a r o u g h fi g u r e o f 2 0 m il li o n a t 6 % p o s s ib ly a 1 .2 , 1 0 . 8
m il li o n . A r i t h m e tic b u t i t d id n o t c o m e t o 4 . 6 3 .
ADV MAHLAPE SELL O : Continue please.
MR FRANCIS QUENTIN CALLARD:

T h e f u r th e r p o i n t to t h a t i f I m a y

r e fe r t o p a g e 2 8 5 . Th e a s t e r is k th e r e w h i c h g iv e s a te n p e r c e n t a d d e d
f o r o p ti o n s , v a r i a ti o n o r d e r s , s p e c i a l to o l in g , t e s t e q u ip m e n t , i n i ti a l
s p a r e s a n d c a p i ta l s p a r e d i s a – if n o t a f u l l d u p lic a ti o n it i s c e r t a i n l y a
p a r t i a l d u p li c a t io n o f th e li n e i t e m o n p a g e 2 w h e r e a d d it i o n a l c o s t fo r
v a r ia t io n s d u t ie s i t is n o w r e f le c t e d a g a i n a s a 1 0 % a d d e d fo r o p ti o n s ,
20

v a r ia t io n o r d e r s , d u ti e s – s o fr o m – i t a p p e a r s to b e c o u n t e d a n u m b e r
of times.
A D V M A H LA P E S E L L O :

A n d l o o k i n g a t t h a t ta b le i t s t a te s t h a t

d is c o u n t n e g o ti a t e d i s 4 .4 7 m il li o n p e r l o c o m o ti v e .

I f o n e w e r e to

d is c o u n t t h a t d is c o u n t th e t o ta l o f t h e a d d i ti o n s w o u l d b r i n g t h e
p u r c h a s e p r i c e to 4 – t o 4 8 , is t h a t s o ? I f w e l o o k a t t h e t a b l e a n d w e

Page 10 of 247

20 MAY 2019 – DAY 96
d o n o t ta k e in t o c o n s i d e r a ti o n t h e d is c o u n t n e g o t ia t e d , t h e a c t u a l
in c r e a s e c o m e s t o 4 8 m il li o n p e r lo c o m o t i v e a n d i t r e d u c e s t o 4 4 w h e n
o n e ta k e s i n to c o n s id e r a ti o n t h e d is c o u n t n e g o ti a t e d ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELL O : Is that correct.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : I n te r p r e t a ti o n o f t h e t a b l e ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Yo u p r o c e e d i n y o u r s t a t e m e n t to q u o te fr o m
10

t h e F u n d u d z i R e p o r t i n r e s p e c t o f th is a c q u is it i o n c o u l d – w h a t is th e
p u r p o s e o f s o d o in g ? D o y o u d o s o t o in d i c a t e t h a t Fu n d u d z i y o u r v i e w
o r y o u r c o n c l u s i o n is c o n s is te n t w i t h F u n d u d z i o r w h a t is t h e p u r p o s e o f
that quotation?
MR FRANCIS QUENTIN CALLARD :

Whether my view was consistent

w i t h F u n d u d z i g i v e n th a t m y v i e w w a s p r i o r to th a t m a y I s a y t h a t
F u n d u d z i ’s v i e w w a s p e r h a p s c o n s is t e n t w i t h m in e p e r h a p s in s o m e
m o r e d e ta il a n d c a lc u l a ti o n b u t i t c o m e s to th e s a m e – t h e s a m e
conclusion.
A D V M A H L A P E S E L L O : A n d fo r t h e r e c o r d C h a i r t h e F u n d u d z i R e p o r t
20

w a s – i s p a r t o f t h e b u n d l e o n Tr a n s n e t th a t h a s b e e n s u b m i tt e d t o y o u .
A n d F u n d u d z i d id i n v e s ti g a t e t h i s tr a n s – p a r t ic u l a r tr a n s a c ti o n . W h a t
t h e n tr a n s p ir e d a ft e r y o u h a d w o r k e d o u t t h e n e w N P V ?
M R F R A N C I S Q U E N T I N C A L LA R D : W e ll s o m e t i m e la t e r w h e n l o o k in g
a t th is m e m o r a n d u m a g a in a n d I a m o n it e m – p a r a g r a p h 6 7 o f m y
r e p o r t t h a t s u b s e q u e n t i n te r r o g a ti o n o f t h e m e m o r a n d u m fr o m L e h a r

Page 11 of 247

20 MAY 2019 – DAY 96
r a i s e d th e f o l l o w i n g q u e s ti o n . T h a t p a r a 5 A o f t h e m e m o r a n d u m s t a te s :
“ F o r e i g n e x c h a n g e r a te s t h e r a n d h a s d e p r e c i a t e d b y 7 . 8 fo r a g a in s t
t h e J a p a n e s e Ye n .

T h is h a s i m p a c te d th e e x p e c tiv e p r i c e o f th e

lo c o m o t iv e a s a p p r o v e d b y th e – t h is h a s i m p a c te d t h e e x p e c t iv e p r i c e
o f th e l o c o m o tiv e a s p e r t h e b u s i n e s s c a s e a n d u l ti m a t e l y t h e e s t i m a t e d
t o t a l c o s t E T C is a p p r o v e d b y t h e b o a r d b y a p p r o x i m a te ly 1 0 . 7 4 % .
ADV MAHLAPE SELLO: Hm.
M R F R A N C I S Q U E N T I N C A L LA R D :

I c o m m e n t e d t h a t th is w a s m o s t

u n u s u a l a s t h e J a p a n e s e Ye n w o u l d b e a s s o c i a t e d w i t h M i ts u i J a p a n e s e
10

C o m p a n y a n d n o t C S R a C h in e s e c o m p a n y. F u r th e r m o r e th e c a s h fl o w
s p r e a d s h e e t t h a t w a s p r e s e n t e d t h a t is A n n e x u r e 1 7 a n d t h a t is p a g e
2 5 6 o f t h e b u n d le in A n n e x u r e 1 7 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : A ls o r e fl e c ts a U n i te d S t a t e s d o ll a r
for CSR.

I c a n n o t t a lk t o t h e a n o m a ly w h y w e w o u l d b e ju s ti fy in g a

p r i c e o f a l o c o m o ti v e i n J a p a n e s e Ye n w h e n i n f a c t i t w a s fr o m C h in a
b a s e d o n a U S A i m p o r t e d c o m p o n e n t w o u l d b e b a s e d i n U S d o ll a r s .
CHAIRPERSON :

W e l l w a s t h a t p o s s i b ly i n d i c a t iv e o f f a il u r e b y

w h o e v e r d r a ft e d t h e r e p o r t to a p p l y th e ir m in d s t o r e le v a n t is s u e s
20

b e c a u s e t h a t w o u l d b e r e le v a n t ?
M R F R A N C I S Q U E N T I N C A L LA R D : I r e a d i t a s …
CHAIRPERSON :

Or could it be in other words some carelessness or

c o u l d it b e t h a t i t w a s s o m e t h in g e ls e ? A r e y o u a b l e to s a y o r w e r e y o u
able to think of why anybody could produce a memorandum that had
t h is k i n d o f a n o m a l y ?

Page 12 of 247

20 MAY 2019 – DAY 96
MR FRANCIS QUENTIN CALLARD :

T h e o n ly r e a s o n I c a n o ff e r Mr

C h a ir m a n is t h a t g iv e n t h e ti m e fr o m w h e n a m e m o r a n d u m w a s a l t e r e d
fr o m m y o r ig in a l c a lc u la t io n s t h a t t h o s e a l t e r i n g th e m e m o r a n d u m d i d
n o t e i th e r h a v e t h e ti m e o r t h e b a s e i n f o r m a ti o n t o d o a c o m p le t e
r e w o r k i n g o f t h e m e m o r a n d u m . To i m p l e m e n t t h e s e c h a n g e s w o u l d b e
q u i te e x te n s iv e , i t w o u l d t a k e c e r t a i n ly a f a ir a m o u n t o f w o r k . T h e y d i d
n o t h a v e t h a t a m o u n t o f – t h e y d id n o t h a v e t h a t ti m e a v a i la b le a n d
h e n c e j u s t l e f t i t a s c h a n g i n g t h e fir m w i t h o u t c h a n g i n g t h e a c t u a l
u n d e r l y i n g a s s u m p t i o n s a n d c a lc u l a ti o n s w it h i n t h e m e m o r a n d u m .
10

CHAIRPERSON:

W e ll o n t h e f a c e o f i t i t p o in ts t o s a y th e l e a s t a n

a l a r m i n g a m o u n t o f c a r e l e s s n e s s b e c a u s e h e r e y o u a r e d e a li n g w i t h a
tr a n s a c ti o n t h a t c o s t s b il li o n s .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
C H A I R P E R S O N : A n d o n e w o u l d h a v e th o u g h t t h a t m o r e c a r e w o u l d b e
s h o w n i n w o r k i n g a n y t h in g p a r tic u la r ly t h a t h a s s o m e th i n g t o d o w i t h
p r i c e s a n d s o o n a n d t h is k i n d o f m is t a k e o n t h e f a c e o f i t j u s t s e e m s
y o u k n o w a v e r y h i g h d e g r e e o f c a r e l e s s n e s s . H o w c a n y o u m is s u s i n g
t h e c o r r e c t c u r r e n c y f o r s o m e th i n g lik e t h is w h e n y o u w a n t t o a d j u s t
prices?
20

M R F R A N C I S Q U E N T I N C A L L A R D : I tr u l y c a n n o t e x p la i n it M r C h a ir I
d o n o t th in k i t i s e x p l a in a b l e a s I p u t in m y s t a te m e n t I b e li e v e t h a t M r
S i n g h w i t h w h o m I h a d b e e n s u b m it t in g t h e s e o r i g i n a l b u s i n e s s c a s e s
a n d M r L e h a r t h e a u th o r o f t h e m e m o r a n d u m .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L L A R D : F r o m w h o m I r e c e iv e d i t th a t t h e y

Page 13 of 247

20 MAY 2019 – DAY 96
s h o u l d ta lk t o t h i s a n o m a ly.

I c a n n o t e x p l a in t h e a n o m a ly b u t u l ly

a g r e e w i t h y o u t h a t i t is u n e x p l a i n a b l e t h a t o n e w o u l d j u s ti f y a p r ic e
in c r e a s e f r o m a l o c o m o ti v e w h ic h o n e is – w h e r e t h e f o r e i g n c o m p o n e n t
is c o n tr a c t e d i n U S d o l la r s .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L L A R D : To tr y a n d e x p l a in t h a t b a s e d o n a
m o v e m e n t o f J a p a n e s e Ye n .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : It m a k e s – I c a n n o t s e e i t m a k i n g
10

a n y l o g ic a l s e n s e w h a ts o e v e r.
C H A I R P E R S O N : H m . A n d o n e w o u l d h a v e th o u g h t t h a t m a y b e b e fo r e
it w a s g iv e n t o y o u i t w o u l d h a v e p a s s e d a f e w p e o p l e a t l e a s t o n e o f
w h o m s h o u l d h a v e p ic k e d t h is u p ?

I f t h e f ir s t p e r s o n – i f t h e d r a f t e r

h a d m a d e a m is t a k e ?
M R F R A N C I S Q U E N T I N C A L LA R D : A s I …
CHAIRPERSON :

It i s ju s t – i t is j u s t s tr a n g e o n t h e f a c e o f it b u t

m a y b e – m a y b e t h e r e w i ll b e a n e x p l a n a ti o n t h a t w i ll s h o w t h a t y o u
k n o w i t is n o t s o s tr a n g e .
M R F R A N C I S Q U E N T IN C A L L A R D :
20

I t w o u l d b e in t e r e s ti n g a n d

in f o r m a ti v e i f s u c h a n e x p la n a ti o n w e r e t o c o m e o u t M r C h a ir.
CHAIRPERSON : Ja. Ja okay thank you.
ADV MAHLAPE SELLO:

O k a y t h a n k y o u C h a ir.

M r C a ll a r d t h e

q u o t a t i o n in i t a l ic s a t y o u r p a r a g r a p h 6 7 a c t u a ll y d e r iv e s f r o m p a g e 2 8 3
of Annexure 18A under table 1 at A.
MR FRANCIS QUENTIN CALLARD:

T h a t is – th a t i s c o r r e c t I s h o u ld

Page 14 of 247

20 MAY 2019 – DAY 96
h a v e m e n ti o n e d t h a t .
ADV MAHLAPE SELLO: I …
CHAIRPERSON :

Maybe before we proceed.

N o w th is m e m o r a n d u m

t h a t M r L a h e r g a v e y o u t h a t w e a r e d e a l in g w i t h n o w.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : T h i s i s n o w a c e r t a i n v e r s io n o f t h e m e m o r a n d u m t h a t
y o u w e r e a s k e d t o e ff e c t c e r t a i n c h a n g e s t o t h a t w e r e n o t o f y o u r o w n ?
M R F R A N C I S Q U E N T I N C A L L A R D : S o r r y i f I u n d e r s t a n d M r C h a ir y o u
are…
10

C H A I R P E R S O N : J a is i t – is i t a c e r t a i n v e r s i o n o f t h a t m e m o r a n d u m ?
R e m e m b e r t h e o n e y o u w e r e a s k e d to – i n r e s p e c t o f w h ic h y o u w e r e
a s k e d t o e ffe c t c h a n g e s , y o u r e m e m b e r t h a t o n e w e t a lk e d a b o u t?
M R F R A N C I S Q U E N T I N C A L LA R D :

Ye s .

I d i d n o t d r a f t t h is

memorandum.
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : I r e c e i v e d …
C H A I R P E R S O N : J a s o it is a c o m p l e te d i ff e r e n t m e m o r a n d u m ?
M R F R A N C I S Q U E N T I N C A L LA R D : It is c o m p l e t e …
C H A I R P E R S O N : F r o m t h e o n e t h a t w e ta l k e d a b o u t ?
20

MR

FRANCIS

QUENTIN

CALLARD:

It is

a

c o m p l e te

d i ffe r e n t

memorandum.
CHAIRPERSON : Ja.
MR FRANCIS QUENTIN CALLARD:
have

m e n ti o n e d

t h a t t h is

A n d p e r h a p s fo r c l a r i ty I s h o u l d

memorandum was addressed

–

to

be

a d d r e s s e d t o th e B o a r d A c q u is i ti o n s a n d D e v e l o p m e n t C o m m i t t e e

Page 15 of 247

20 MAY 2019 – DAY 96
m o t iv i n g w h y t h e in c r e a s e in t h e 1 0 0 C l a s s 1 9 E L o c o m o ti v e s .
C H A I R P E R S O N : O h y e s , y e s , y e s . N o w I – b u t – b u t w h a t is s tr a n g e
is

that it seems

th is

d i ffe r e n t m e m o r a n d u m s e e ms

to

be

a ls o

c h a r a c te r is e d a t le a s t in p a r t b y s i m i la r c a r e l e s s n e s s t o s a y t h e le a s t
a s w e s a w i n te r ms o f t h e c h a n g e s t h a t w e r e y o u a s k e d b y M s M d l e t s h e
t o e ff e c t o n th e o th e r m e m o r a n d u m .
MR FRANCIS QUENTIN CALLARD:

I w o u ld a g r e e w i th – y e s M r

C h a ir m a n I w o u ld a g r e e .
C H A I R P E R S O N : Yo u r e m e m b e r y o u to l d m e
10

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : T h a t w h e r e th e y w e r e s u p p o s e d to s a y C S R t h e y s a i d
G E a n d s o o n a n d s o o n a n d t h e r e w e r e o t h e r t h i n g s w h ic h w e r e p a r t o f
y o u r c o n c e r n s t h a t j u s t d id n o t m a k e s e n s e .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t
C H A I R P E R S O N : Yo u k n o w n o w y o u h a v e a n o t h e r m e m o r a n d u m w h e r e
a w r o n g c u r r e n c y is b e in g u s e d in o r d e r t o j u s ti fy o r s e e k t o j u s t if y a n
in c r e a s e y o u k n o w. S o i t i s – t h e t w o m e m o r a n d u m a n d m a y b e t h e y a r e
n o t th e o n l y o n e s .

Tw o m e m o r a n d a s e e m t o b e c h a r a c t e r i s e d b y a t

le a s t i n p a r t s i m il a r k i n d o f c a r e l e s s n e s s .
20

M R F R A N C I S Q U E N T I N C A L L A R D : Th a t i s s o . I f I m a y s u m m a r is e M r
C h a ir m a n .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : T h e m e m o r a n d u m I r e c e iv e d fr o m
M s M d l e t s h e m o d i fy – o r w i t h t h e c h a n g e f r o m M i ts u i t o C S R h a d – s ti ll
h a d a s i ts o r i g i n a l a s s u m p t i o n s l o c o m o ti v e c o s ts a n d c a l c u l a t i o n s

Page 16 of 247

20 MAY 2019 – DAY 96
b a s e d i n J a p a n e s e Ye n .

T h e m o t iv a ti o n fo r t h e in c r e a s e p o s t e v e n t

b e c a u s e t h is is n o w t h e – I r e c e iv e d t h is o n t h e 1 5 M a y a n d t h e t e n d e r s
– t h e a w a r d s h a v e a lr e a d y b e e n m a d e .

T h i s i n c r e a s e p o s t e v e n t is a

m e m o r a n d u m t o m o ti v a t e fo r t h e in c r e a s e b u t n e v e r t h e l e s s s t il l b a s e d
f o r C h i n e s e l o c o m o ti v e s – l o c o m o t iv e s f r o m C S R w h e r e t h e i m p o r t e d
c o m p o n e n t is i n d o ll a r s t h e i n c r e a s e is m o t iv a t e d o n c h a n g e s i n t h e
J a p a n e s e Ye n . I c a n n o t e x p l a i n th a t a n o m a ly.
CHAIRPERSON :

I t is d i ffi c u l t to u n d e r s t a n d .

I mean you referred –

y o u r e f e r r e d u s o n Fr i d a y y o u r e fe r r e d u s t o t h e e m a il t h a t M r G a m a
10

s e n t t o Mr S i n g h .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
CHAIRPERSON :

A f t e r r e c e i v i n g y o u r e m a il w h e r e y o u w e r e r a is i n g

y o u r c o n c e r n s a b o u t t h e o th e r m e m o r a n d u m .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : A n d i n t h a t e m a il h e i n h is o w n w o r d s s a i d t h is is a
mess.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
CHAIRPERSON :

B u t w e – w e k n o w f r o m w h a t y o u t o ld y o u u s a n d

m a y b e a n o th e r w it n e s s w ill c o m e a n d s a y t h e r e is s o m e t h i n g y o u
20

m is s e d t h a t is w h y y o u t o ld u s t h is . T h a t – i t lo o k s li k e – i t l o o k e d l ik e
the

m e m o r a n d u m w e n t to

the

B o a r d A c q u is i t io n s

and

D is p o s a ls

C o m m i t t e e w i t h o u t c o r r e c t in g s o m e o f t h o s e o b v i o u s is s u e s t h a t y o u
h a d r a is e d . S o w it h th a t – s o o n e w o u l d h a v e t h o u g h t t h a t m a y b e a f te r
t h a t a n y f u r t h e r m e m o r a n d a w o u l d r e a l ly b e l o o k e d a t q u it e c a r e f u l ly f o r
– t o m a k e s u r e t h a t th e s e k i n d s o f m is t a k e s w e r e n o t t h e r e . B u t h e r e

Page 17 of 247

20 MAY 2019 – DAY 96
we have another one that makes some of the same mistakes that we
saw in the other one.
M R F R A N C I S Q U E N T I N C A L L A R D : T h e y a r e – t h e y a p p e a r – c e r ta in ly
they

appear

to

have

been

c a r r ie d

through

fr o m

that

o r i g in a l

memorandum.
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L L A R D : Th e y a p p e a r to h a v e b e e n c a r r i e d
t h r o u g h h e r e w i th o u t c o r r e c ti o n o r q u a li fi c a ti o n o r e x p l a n a t io n .
C H A I R P E R S O N : Ye s .
10

M R F R A N C I S Q U E N T I N C A L LA R D : T h e y c e r t a i n l y a p p e a r s o .
C H A I R P E R S O N : A s I s a y m a y b e s o m e b o d y w i ll c o m e a n d s a y n o t h e r e
is s o m e t h i n g y o u p e o p l e d o n o t u n d e r s t a n d t h e r e i s n o t h i n g w r o n g w i t h
w h a t th e s e m e m o r a n d a s a y. W e w i ll w a i t t o h e a r.
A D V M A H L A P E S E L L O : I n d e e d C h a ir.
CHAIRPERSON : Ja.
A D V M A H L A P E S E L L O : W e w il l . I h a d i n d ic a te d M r C a l l a r d t h a t t h a t
q u o t a t i o n a t y o u r p a r a g r a p h 6 7 is e x tr a c t e d fr o m p a g e 2 8 3 o f t h a t
memorandum under the table at p aragraph A.

N o w i t – l o o k in g a t

p a r a g r a p h A I n o tic e d th a t w h a t y o u q u o t e d i s th e fi r s t p o r t i o n o f
20

p a r a g r a p h A . T h e r e m a in d e r r e a d s a s f o l lo w s a n d I q u o t e .
“It

should

a ls o

be

considered

th a t

during

the

n e g o ti a ti o n p r o c e s s t h e r a n d w a s i m p a c t e d b y t h e
p o s s i b il it y o f w a r in t h e U k r a i n e w h ic h r e s u l t e d i n
Tr a n s n e t ta k i n g t h e v ie w t h a t t h e r a n d s h o u l d b e
fi x e d

at

current

l e v e ls

and

Page 18 of 247

n e g o ti a ti o n s

and

20 MAY 2019 – DAY 96
c o n tr a c ti n g s h o u l d b e s p e e d ily c o n c lu d e d .”
Yo u d o n o t d e a l w i th t h i s p a r t o f t h a t p a r a g r a p h i n y o u r s t a t e m e n t . I d o
n o t k n o w i f y o u c a n e x p r e s s a v i e w - fi r s t ly w h e t h e r y o u c a n e x p l a in
w h a t t h a t m e a n s a n d s e c o n d ly e x p r e s s a v ie w w h a t p o s s ib l e i m p a c t t h e
a n t ic i p a te d w a r i n th e U k r a i n e w o u l d h a v e o n t h e p r ic e o f t h e s e – t h e s e
lo c o m o t iv e s .
M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u c o u n s e l / C h a ir. I c a n n o t
express a view on that.

R e a d i n g t h i s m e m o r a n d u m w a s th e fi r s t o n e

c o m e s a c r o s s i t in n o n e - c e r t a in ly in n o n e o f t h e d is c u s s i o n s w h ic h I
10

h a d h a d o n f o r e i g n e x c h a n g e r a t e s a n d t h e l ik e g i v e n t h is w a s t h is a
f a c to r t h a t w e h a d t a k e n in t o c o n s i d e r a ti o n p e r s o n a l ly th a t I c a n r e c a ll .
O n e c a n – I c o u l d o n l y s p e c u la t e a s t o w h y t h is r e a s o n w o u l d b e p u t i n
t h is d o c u m e n t a n d s p e c u l a te th a t t h e p o s s ib il i ty t h e i m p a c t o f a w a r in
t h e U k r a i n e – I c a n n o t m a k e s e n s e o f i t b u t l e t l e a v e i t a t th a t .
A D V M A H L A P E S E L L O : O k a y.
C H A I R P E R S O N : Ye s .
ADV MAHLAPE SELLO:

Th a n k y o u . I t h o u g h t y o u m i g h t – y o u m i g h t

s h e d li g h t o n t h a t.
M R F R A N C I S Q U E N T I N C A L LA R D : I c a n n o t.
20

ADV MAHLAPE SELLO:
in c r e a s e .

S e e in g a s i t i m p a c te d t h e fo r e i g n e x c h a n g e

S o – b u t a t t h e C h a ir s a y s p e r h a p s s o m e b o d y w i ll c o m e

a v a i la b le a s a w i t n e s s t o e x p la i n t h e s e i s s u e s .

Yo u a t p a r a g r a p h 6 8

in d i c a t e t h a t y o u h a d e x p r e s s e d c o n c e r n s a b o u t d e l a y i n g d e liv e r y a n d
t h a t w e h a d d e a lt w i t h o n Fr id a y a lr e a d y a n d y o u i n d ic a t e t h a t – th a t
y o u r c o n c e r n s w e r e r e a lis e d o n 6 J u n e 2 0 1 4 a t p a r a g r a p h 6 8 .

Page 19 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

C a n y o u d e a l w i t h t h e c o n te n ts o f p a r a g r a p h

68 …?
M R F R A N C I S Q U E N T I N C A L LA R D : C e r t a i n ly.
A D V M A H L A P E S E L L O : A n d g o in g fo r w a r d .
M R F R A N C I S Q U E N T I N C A L LA R D :

I f I m a y a n d r e c a p p i n g t h a t my

in it i a l e m a il e x p r e s s e d c o n c e r n s t h a t Tr a n s n e t e n g i n e e r in g ’s c a p a c it y t o
d e li v e r. R e c e iv e d th is – a n e m a il o n 6 J u n e 2 0 1 4 fr o m a c o ll e a g u e . H e
c o p i e d m e o n a m a i l t h a t h e h a d s e n t to h is G e n e r a l M a n a g e r C a p i t a l
10

P r o je c ts . M a y I t a k e y o u p l e a s e to A n n e x u r e 1 9 p a g e 2 9 0 ? M a y I s t a r t
fir s t p le a s e a t 2 8 9 ?
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

2 8 9 i s j u s t t h e m a i l fr o m a

c o l l e a g u e t o my s e l f a n d i t is – th e s u b j e c t is C l a s s 2 0 E P r o d u c t io n
C o n c e r n s . Fr o m m y e m a i l I m e n ti o n e d th a t :
“ Pr o d u c ti o n c o n c e r n s o n t h e c l a s s 2 0 E m a y i m p a c t
the class 21E.”
I f I m a y t h e n t a k e y o u f u r t h e r to p a g e 2 9 0 p le a s e w h i c h is a fa ir l y lo n g
e x p o s i t io n o f t h e c la s s 2 0 E p r o d u c ti o n c o n c e r n s . I t is n o t m y i n te n ti o n
20

t o g o in t o th is in a ll it s d e t a i l s u ffi c e t o s a y t h a t t h is p a g e to g e th e r w i t h
t h e s u b s e q u e n t p a g e 2 9 0 d e a ls w i th t h e s e c o n c e r n s in s o m e d e t a il b u t I
w o u ld ju s t li k e p l e a s e to t a k e y o u t o o n e o r tw o i t e m s a s il l u s tr a t iv e o f
the point.
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : I f y o u c o u l d l o o k a t t h e fir s t b u ll e t

Page 20 of 247

20 MAY 2019 – DAY 96
p o i n t p l e a s e u n d e r p a r a g r a p h 1 . It s a y s :
“ N o t e th a t t h e l o c o m o tiv e 2 0 0 1 5 is s t il l o n b l o c k s
a n d th is lo c o m o t iv e w a s s c h e d u l e d t o b e h a n d e d
over in May for acceptance in June 2014.”
It says:
“ N o t e th a t l o c o m o tiv e E 2 0 0 1 5 th a t is c la s s E 2 0 0 1 5
t h a t i s l o c o m o ti v e 1 5 .”
C o u ld I a s k y o u p l e a s e t o t u r n to p a g e 2 9 7 o f t h e - p a g e 2 9 7 i s a
p ic t u r e o f a lo c o m o t iv e a n d i t is m a r k e d – t h a t i s lo c o m o t iv e 2 0 0 1 5 a n d
10

w e w i ll s e e t h a t it i s s t il l o n b l o c k s w h e r e a s i n b lo c k s i t s h o u l d b e f a r –
s h o u l d h a v e p r o g r e s s e d a lo t fu r t h e r.

I t s h o u l d a lr e a d y b e o n i ts

b o g ie s . I t s h o u ld b e o n i t s w h e e l s a n d it s h o u l d b e a l m o s t m o b il e a n d
it i n d ic a te s t h a t th is lo c o m o t iv e i s w a y b e h i n d in i ts p r o d u c t i o n .

If I

could do a second example.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

The

–

under

sub

–

under

p a r a g r a p h 2 t h e r e t h e fir s t b u l le t s a y s :
“ R / T E is s c h e d u le d t o h a n d o v e r l o c o m o tiv e s 2 0
0 1 6 .”
20

I f I c o u l d t a k e y o u p l e a s e t o p a g e - p ic t u r e o n 2 9 – s o r r y – t o h a n d o v e r
lo c o m o t iv e 2 0 0 1 6 a n d if y o u c o u ld h a v e a l o o k p le a s e a t t h e p ic t u r e o n
page 296.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

A t t h e b o t to m o f t h a t p ic t u r e i t

in d i c a t e s t h a t t h is is l o c o m o t iv e E 2 0 0 1 6 .

Page 21 of 247

T h a t is l o c o m o ti v e 1 6 a n d

20 MAY 2019 – DAY 96
lo o k in g a t t h e i n te r i o r o f t h a t l o c o m o tiv e i t i s c e r t a i n l y n o w h e r e n e a r
r e a d y fo r – fo r h a n d o v e r. A s i m i la r s t o r y is t o l d i f w e l o o k a t l o c o m o t iv e
E 2 0 0 2 1 – lo c o m o t iv e 2 1 w h ic h is p i c tu r e d o n p a g e 2 9 2 . I f w e tu r n t o
p a g e 2 9 2 p l e a s e a n d t h a t is t h e in t e r io r o f t h e l o c o m o t iv e . T h is e m a i l
was sent in May – sorry – in June.
ADV MAHLAPE SELLO: June.
M R F R A N C I S Q U E N T I N C A L LA R D : I n J u n e a n d i t s a i d t h is l o c o m o t iv e
is s c h e d u l e d f o r h a n d o v e r f o r a c c e p ta n c e in J u ly 2 0 1 4 a n d t h e i n te r i o r
o f t h e lo c o m o t iv e is to t a l ly e m p ty.
10

I t is d e v o i d o f e q u i p m e n t , m o t o r s

a n d th e lik e a n d th is i s – t h e s e a r e i ll u s tr a ti v e o f t h e d e la y s i n th e
p r o d u c t io n l in e .
ADV MAHLAPE SELLO:

A n d – a n d t h a t c o n c l u s i o n is c a p t u r e d i n

M r H a r r is ’ e m a i l a t 2 8 9 o f a p o s s i b l e t h r e e m o n th d e l a y …
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : A t p a r a g r a p h 3 th e r e o f ?
M R F R A N C I S Q U E N T I N C A L LA R D :

T h a t is - s u p p o r ts h is c o n c l u s i o n

yes.
A D V M A H L A P E S E L L O : A n d y o u s a id – y o u s a id h a v in g r e c e iv e d th is
e m a i l a n d r e p o r t y o u th e n d r a f t e d a m e m o r a n d u m c o n c e r n in g t h e s e
20

delays?
M R F R A N C I S Q U E N T I N C A L LA R D :

Correct.

The memorandum is in

Annexure 20.
A D V M A H L A P E S E L L O : Ye s . Yo u d e a l w it h t h a t fr o m y o u r p a r a g r a p h
69?
M R F R A N C I S Q U E N T I N C A L LA R D : I w i ll d e a l w it h th a t f r o m p a r a g r a p h

Page 22 of 247

20 MAY 2019 – DAY 96
6 9 - b e c a u s e o f th e s e d e la y s a n d th e c o l l e c ti v e c o n c e r n s w e h a d a b o u t
t h e s e d e la y s o n e o f th e o p ti o n s w a s to a p p r o a c h C h i n a S o u t h R a il to
i m p o r t 1 0 0 l o c o m o tiv e s d ir e c tl y fr o m C h in a . R e c o g n is e t h e i m p l ic a ti o n s
o n l o c a l c o n te n t a n d th e l ik e b u t c e r t a i n ly t h is w o u l d b r i n g t h e m in f a ir ly
q u ic k ly. R e c a l l t h a t th e m o t iv a t i o n s a i d th a t t h e y c o u l d f iv e l o c o m o ti v e s
p e r d a y.

S o w e s h o u ld b e a b l e to g e t th e 1 0 0 l o c o m o ti v e s f a ir l y

q u ic k ly. I d r a f te d t h e m e m o r a n d u m t o t h is e ffe c t i n c o n j u n c ti o n w i t h
v a r io u s c o ll e a g u e s .

I sent this memorandum to General Manager

R i t a R o p e r t h a t p e r h a p s t h a t s h e w o u l d f o r w a r d i t to Mr G a m a s o w h o
10

w o u ld i n t u r n f o r w a r d it u p t h e h i e r a r c h y t h a t w e i m p o r t 1 0 0 l o c o m o ti v e s
d ir e c t ly b u t i t s t o p p e d a t M s R o p e r. I t d i d n o t g o f u r t h e r. H o w e v e r t h e
p u r p o s e o f t h is m e m o r a n d u m w a s – a n d t a b l in g i t – w a s j u s t to e x p r e s s
o u r c o n c e r n a t th e d e la y a n d w h a t th e p o s s ib l e m i t ig a ti n g a c t io n s w e r e
w e c o u l d t a k e p la c e – w e c o u l d p u t i n p l a c e to o v e r c o m e t h o s e d e l a y s .
ADV MAHLAPE SELLO:

Okay and you say this – as far as you are

a w a r e – t h i s e m a il w a s n o t a c te d u p o n ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Th is m e m o r a n d u m r a t h e r.
M R F R A N C I S Q U E N T I N C A L LA R D : E m a il w a s n o t a c te d o n .
20

A D V M A H L A P E S E L L O : A n d th e n w h a t tr a n s p ir e d t h e r e a f t e r ?
M R F R A N C I S Q U E N T I N C A L LA R D :

N o th i n g in s o f a r a s I w a s i n v o lv e d

w i t h i n e x p e d it i n g lo c o m o t iv e d e li v e r y. W h a t h a p p e n e d th e r e a ft e r w a s
o n – a n d t h a t d e a ls w i th – g o e s t o i t e m – p a r a g r a p h 7 0 o f m y s t a t e m e n t
– t h a t o n 2 4 O c t o b e r I r e c e iv e d a n e m a i l fr o m N ir e s h B u d h a i fr o m
Tr a n s n e t C o r p o r a te .

B u d h a i’s r e s p o n s i b i li ti e s – a s I u n d e r s t a n d i t -

Page 23 of 247

20 MAY 2019 – DAY 96
in c l u d e d p r o v i d i n g a d m in is tr a tiv e s u p p o r t to t h e v a r i o u s a p p r o v a l
b o d ie s in th e Tr a n s n e t G r o u p a n d s h o w t h a t s u b m i s s io n s w e r e i n t h e
r e q u ir e d f o r m a t a n d m e t th e r e q u ir e d s t a n d a r d a n d w a s th e l ia is o n f o r
c o m m u n ic a ti n g w i th t h e D e p a r t m e n t o f P u b l ic E n t e r p r is e . T h e e s s e n c e
o f th is p o i n t w a s th a t B u d h a i r e q u e s t e d t h a t I r e v i e w a t a b l e o f r is k s
a n d m i ti g a t i n g a c ti o n s r e l a ti n g t o 1 0 0 2 1 E l o c o m o ti v e s .
A D V M A H L A P E S E L L O : I f I m a y ju s t p o i n t o u t fo r r e c o r d p u r p o s e s t h e
s p e l li n g o f N ir e s h B u d h a i - h i s f ir s t n a m e N - I- R - E- S - H , s u r n a m e B - U - D H - A - I . T h a n k y o u . Yo u m a y p r o c e e d .
10

M R F R A N C I S Q U E N T I N C A L LA R D :

Thank you. As per my paragraph

7 1 I u p d a t e d t h e ta b l e in c o n s u lt a ti o n w i t h m y te c h n ic a l c o ll e a g u e s fr o m
Fr e i g h t R a il a n d w o u l d h i g h li g h t th e r is k s a n d t h e m i ti g a ti o n a c t i o n s
la r g e l y m ir r o r e d t h e c o n c e r n s o f m y e m a il t o M r G a m a a n d M r J i y a n e i n
J a n u a r y 2 0 1 4 a n d th e r e m e d i a l a c ti o n s i n c o r p o r a t e d t h e s p e c i fic a ti o n s
o f th e 2 0 E – 2 1 E lo c o m o t iv e s . I f I m a y t a k e y o u to p a g e 2 1 – s o r r y – t o
Annexure 21?
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

To A n n e x u r e 2 1 p a g e 3 0 6 th e

s u b j e c t o f t h a t e m a il o n p a g e 3 0 6 r e a d s :
20

“ R i s k / m i ti g a t i o n

plans

fo r

the

100

coal

l in e

lo c o m o t iv e s .”
A n d a t t h e b o t to m o f t h a t p a g e is a ta b l e o f t h e r i s k a n d t h e m i t ig a ti o n
a c ti o n s . T h e m i t ig a ti n g a c t i o n s w h i c h I p u t i n a r e i n t h e li g h t e r c o lo u r
in b l u e w h e r e I a m e n d e d a n d a d d e d t o o w h a t w a s a lr e a d y i n t h e t a b l e
a n d p a r t ic u l a r ly u n d e r t h e d e s ig n r i s k a n d t h e o p e r a ti o n a l r e a d i n e s s

Page 24 of 247

20 MAY 2019 – DAY 96
w a s w h a t I a d d e d . E s s e n ti a lly t o a l l in t e n ts a n d p u r p o s e s a s I s t a te d
t h is h i g h l ig h t e d t h e r is k s a lr e a d y p r e v io u s l y p o i n te d o u t .
A D V M A H L A P E S E L L O : Ye s .
C H A I R P E R S O N : W h a t – w h a t w o u ld b e th e i m p l ic a ti o n s o f t h e f a c t t h a t
what you were coming up now was based on the c oncerns you had
r a i s e d e a r l ie r w it h M r G a m a b u t w h ic h h a d b e e n i g n o r e d ? W h a t – w h a t
w o u ld b e th e i m p li c a t io n s o f t h e fa c t t h a t d o w n t h e li n e y o u a r e r a is in g
– y o u r u p d a t e is b a s e d o n t h e s a m e c o n c e r n s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
10

C H A I R P E R S O N : Th o s e c o n c e r n s h a d p r e v io u s ly b e e n ig n o r e d . C o u l d
t h e y b e t a k e n i n to a c c o u n t in t h e l i g h t o f t h e f a c t t h a t t h e y h a d n o t
b e e n t a k e n i n to a c c o u n t b e fo r e ?
M R F R A N C I S Q U E N T I N C A L LA R D : N o .
CHAIRPERSON :

To w h a t e x t e n t w o u ld t a k i n g t h e m i n t o a c c o u n t o n

t h e ir p a r t u n d o a l o t o f t h i n g s t h a t h a d b e e n – h a d b e e n d o n e in
d is r e g a r d o f y o u r c o n c e r n s .
M R F R A N C I S Q U E N T I N C A L LA R D : I t i s m y in t e r p r e ta t io n a n d I s tr e s s
t h a t t h is m y p e r s o n a l c o n n e c ti n g o f t h e d o ts . H a v i n g s e n t th e m a il t o
M r G a m a a n d M r J iy a n e i n J a n u a r y 2 0 1 4 h a v in g n o t e d t h a t t h o s e
20

c o n c e r n s w e r e n o t r e fl e c t e d t o t h e B o a r d o r B A D C w h e n th e tr a n s a c t io n
w a s a p p r o v e d t h e s u b s e q u e n t c h a n g e in t e c h n ic a l s p e c if ic a ti o n s t h a t
w e r e r e q u ir e d .

Th is d o c u m e n t t h a t M r B u d h a i h a d a s k e d m e t o n o w

p r e p a r e w a s a w a y o f n o w c o m m u n i c a t i n g t h o s e r is k s a n d c h a n g e s
f u r th e r i n t o t h e h i e r a r c h y o f t h e o r g a n is a t io n a n d w i d e r i n to t h e
o r g a n i s a t io n b u t th a t is m y i n t e r p r e t a ti o n o f t h i s ta b le a n d g iv e n

Page 25 of 247

20 MAY 2019 – DAY 96
M r B u d h a i ’s r o l e a t t h e t i m e i n p r e p a r in g d o c u m e n t a ti o n t h a t is h o w I
r e a d it a t t h e ti m e .
CHAIRPERSON :

B u t a t a p r a c tic a l le v e l - b e f o r e w e p r o c e e d – c o u l d

t h e y b e t a k in g i n to a c c o u n t w i t h o u t – c o u l d t h e y b e e ff e c t e d w i t h o u t –
w i t h o u t g o i n g b a c k t o t h e B o a r d a n d b a s i c a l ly s a y – y o u k n o w – h e r e
a r e t h in g s t h a t h a v e n o t b e e n b r o u g h t t o y o u r a t t e n ti o n a n d n o w w e –
w e d id n o t p a y a t t e n t i o n t o c e r t a i n c o n c e r n s t h a t w e – h a d b e e n r a i s e d .
W e r e a lis e t h a t t h a t i t is c o m i n g b a c k t o h a u n t u s n o w.

Can you

a p p r o v e t h a t t h i n g s b e d o n e t h is w a y o r c o u l d th e y b e e ff e c t e d w i t h o u t
10

h a v i n g t o g o b a c k to t h e B o a r d o r is th a t s o m e t h i n g t h a t y o u w o u ld n o t
know?
M R F R A N C I S Q U E N T I N C A L LA R D : C e r t a i n ly a t th e te c h n ic a l l e v e l a n d
a t t h e o p e r a ti o n a l l e v e l th e r e w e r e a c t i o n s i n p la c e a n d m a n y a c t i o n s in
p l a c e to d e a l w i th t h e d e f a c t o s i t u a t i o n . T h e s e lo c o m o t iv e s …
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : W e r e c o m i n g …
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

We

had

to

deal

w i th

th e m

( c o u g h in g ) .
20

C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

I c o m m e n t s p e c i fic a lly a s to h o w

a l l o f th is w a s c o m m u n ic a t e d f u r t h e r h i g h e r in t o t h e B o a r d .

I do not

k n o w.
CHAIRPERSON :

B u t y o u s a y o p e r a t io n a l ly y o u r u n d e r s t a n d i n g i s th a t

in e ff e c t w h a t h a d g o n e w r o n g c o u l d s ti ll b e r e c ti fi e d i f t h i s t i m e

Page 26 of 247

20 MAY 2019 – DAY 96
everyone concerned would be act in accordance with what you were
p u t t in g u p o r m o s t o f t h e t h i n g s m a y b e n o t a l l?
M R F R A N C I S Q U E N T I N C A L LA R D :

Most of the things.

What –

c e r t a i n l y w h a t d i d h a p p e n i s I m e n ti o n e d t h e – t h e t e c h n ic a l m e e t in g s
w h ic h to o k p l a c e o n th e 1 9 t h to m o d if y th e l o c o m o t iv e s .

Ye s th e

lo c o m o t iv e s w e r e m o d i f ie d th a t th e y w e r e s u i t a b l e fo r t h e …
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : O p e r a ti o n o n th e c o a l l i n e .
CHAIRPERSON : Hm.
10

M R F R A N C I S Q U E N T I N C A L LA R D : T h a t c e r ta i n ly h a p p e n e d .
C H A I R P E R S O N : Ye s , y e s , y e s .
M R F R A N C I S Q U E N T I N C A L LA R D : S o th e l o c o m o ti v e s w e r e …
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : M o d i fi e d a n d b r o u g h t i n to s e r v ic e .
C H A I R P E R S O N : Ye s , y e s .
M R F R A N C I S Q U E N T I N C A L LA R D :

H o w a l l th e s e m i ti g a ti n g a c t i o n s

a n d t h e l ik e w e r e c o m m u n ic a te d t o t h e B o a r d i n t h e m a n a g e m e n t o f th e
process …
CHAIRPERSON : Ja.
20

M R F R A N C I S Q U E N T I N C A L LA R D : I c a n n o t …
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D : A n d t h a t is w h a t I a m s a y i n g .
C H A I R P E R S O N : B u t a t a p r a c t ic a l l e v e l t h e y c o u l d b e d o n e ?
M R F R A N C I S Q U E N T I N C A L LA R D :

A t a p r a c ti c a l t h e y c o u l d b e d o n e

…

Page 27 of 247

20 MAY 2019 – DAY 96
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D : A n d t h e y w e r e d o n e .
CHAIRPERSON : They were done?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : O k a y, th a n k y o u .
A D V M A H L A P E S E L L O : O k a y. S o th e p la n s y o u p r o p o s e d a t A n n e x u r e
2 1 w e r e t o m it i g a t e t h e i m p a c t o f d e l a y w e r e a c t u a ll y i m p l e m e n te d . Is
t h a t w h a t y o u a r e s u g g e s ti n g ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . W e - w e h a d t o d o th a t . W e 10

w e m o d i f i e d th e l o c o m o t iv e s w h e r e d r iv e r s w e r e tr a i n e d a p p r o p r i a t e ly.
T h o s e p r a c ti c a l th i n g s w e r e d o n e .
A D V M A H L A P E S E L L O : A n d d i d i t - d id t h a t h a v e a n y i m p a c t o n – o n
t h e p r o b l e m o f d e l a y o f d e l iv e r y o f t h e lo c o m o t iv e s o r d id th a t r e m a i n
unchanged – the delay?
M R F R A N C I S Q U E N T I N C A L LA R D :

I t is my u n d e r s t a n d in g th a t t h e

lo c o m o t iv e s w e r e d e l iv e r e d w i th i n t h e – a r e a s o n a b l e t i m e . I w o u l d n o t
lik e to c o m m e n t o n t h e …
A D V M A H L A P E S E L L O : O k a y th a t is f in e .
M R F R A N C I S Q U E N T I N C A L LA R D : I m p l ic a ti o n s o f th e d e l a y.
20

ADV MAHLAPE SELLO:

No

we

w i ll t a k e t h a t u p

perhaps

with

s o m e b o d y e ls e .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

Yo u – y o u t h e n d r a w c o n c lu s i o n s o n t h i s

e n t ir e tr a n s a c t i o n o f t h e a c q u is it i o n o f 1 0 0 l o c o m o ti v e s a t y o u r
paragraph 73?

Page 28 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

A n d y o u e x p r e s s a n o p in io n i n a b o u t s ix

p a r a g r a p h s . W o u l d y o u l i k e t o s u m m a r is e t h a t fo r t h e C h a ir ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s c e r ta i n ly a n d a s y o u p o i n t o u t
in p a r a g r a p h 7 3 :
“ I t w a s m y – i t i s m y c o n s i d e r e d o p in io n th e
d e c is i o n b y g r o u p a n d /o r S u p p ly C h a i n S e r v ic e t o
a r b i tr a r i ly

or

u n i la t e r a l ly

c h a in

technical

s p e c i f ic a ti o n s w it h o u t t e c h n ic a l c o n s u l t a ti o n w e l l
not

10

t e c h n ic a lly

p r o f ic i e n t

ir r e s p o n s ib l e i n t h e e x tr e m e .

th e m s e lv e s

was

Th e i m p a c t o f t h e

c h a n g e …”
73.2:
“ T h e i m p a c t o f t h e c h a n g e fr o m M A R S t o C S R a n d
the

associated

design

changes

on

l o c o m o ti v e

d e li v e r y w e r e n e v e r d is c u s s e d w i th te c h n ic a l o r
o p e r a ti o n s a n d w a s e q u a lly ir r e s p o n s i b l e .”
73.3:
“ T h e d e l a y s c a u s e d n e g a t e d t h e e n t ir e r a i s o n d ’ ê tr e
o f t h e p r o je c t . I b e l i e v e i n … ”

20
73.4:

“ … th a t t h e c o n fi n e m e n t to C S R w a s f la w e d i n
c o n c e p t a n d e x e c u t i o n – i n m y c o n s id e r e d o p i n i o n .
T h e m o t iv a ti o n t o u s e C S R w a s b a s e d o n p r o d u c t i o n
c a p a c i ty i n C h in a a n d a s u p p l ie r w h o a t t h e t i m e o f

Page 29 of 247

20 MAY 2019 – DAY 96
a w a r d h a d y e t t o d e liv e r a w o r k i n g lo c o m o tiv e , d i d
n o t m e e t t h e c o n f in e m e n t r e q u ir e m e n t s in t e r a l ia
t h e s e in c l u d e w h e n g o o d s o r s e r v i c e h a d b e e n
p r o c u r e d a h i g h l y s p e c ia li s e d a n d l a r g e ly i d e n t ic a l
e x e c u te d

by

that

s u p p li e r

and

fu r t h e r

almost

id e n t ic a l t o p r e v i o u s w o r k d o n e .”
And I think we have covered that …
A D V M A H L A P E S E L L O : W e d id .
M R F R A N C I S Q U E N T I N C A L LA R D : Pr e v i o u s l y.
10

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : 7 3 . 5 :
“ T h e i n c r e a s e i n e s t i m a te d t o ta l c o s t fr o m 3 . 8 7 1
b i ll io n t o 4 . 8 4 b i ll i o n fo r t h e a c q u is i ti o n o f 1 0 0
lo c o m o t iv e s w a s u n j u s t if i e d a n d … ”
73.6:
“ … th e u p fr o n t p a y m e n ts a m o u n ti n g t o 6 0 p e r c e n t
b e f o r e t h e f ir s t l o c o m o t iv e w a s d e liv e r e d w e r e
e x c e s s iv e .”
ADV MAHLAPE SELL O: And then that brings you to the conclusion of

20

y o u r te s t i m o n y i n s o f a r a s t h e 1 0 0 l o c o m o ti v e s a r e c o n c e r n e d ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

We move now to a new chapter b ut not very

n e w a s w e h a d p r e v io u s ly t o u c h e d o n it – th e M a r k e t D e m a n d S t r a t e g y
s t a r ti n g a t p a g e 1 8 .

Yo u w il l r e c a l l th a t w e p r e v i o u s ly d e a l t w i t h t h is

s u b j e c t a n d w e – w e p r o m i s e d t h e C h a ir t h a t w e w i ll d e a l w i t h i t i n m o r e

Page 30 of 247

20 MAY 2019 – DAY 96
d e t a i l l a te r i n t h e c o u r s e o f y o u r t e s t i m o n y.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

A n d j u s t t o p u t t h i n g s in c o n t e x t t h a t M D S

d is c u s s io n i n f o r m s t h e n e x t tr a n s a c t i o n w h ic h is th e 1 0 6 4 …
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Ac q u i s i ti o n ? I f t h e n w e c o u l d tu r n t o p a g e 1 8
fr o m p a r a g r a p h 7 4 ? B e f o r e y o u - w e d e a l w i t h t h e d e ta il – C h a ir j u s t t o
in d i c a t e M r C a ll a r d h a s p r o v i d e d A n n e x u r e s – a s t h e C h a ir w il l s e e a t
paragraph 75 – Annexure 26 through to Annexure 35. That is – what –
10

nine annexures.
M R F R A N C I S Q U E N T I N C A L LA R D : J a .
A D V M A H L A P E S E L L O : A t ti m e s t h e y a r e f a ir ly d e ta il e d a n d c o m p l e x
t a b le s a n d i n t h e c o u r s e o f p r e p a r a ti o n w e f o u n d a w a y to p e r h a p s
m a k e t h e m d i g e s t i b l e f o r s o m e o f u s w h o f a il e d t o g o to e n g i n e e r in g
s c h o o l . W e w i ll th e r e fo r e n o t d e a l w i t h t h e a n n e x u r e s i n t h e o r d e r t h e y
a r e p r e s e n t e d a n d i f y o u p e r m i t M r C a ll a r d to m o v e fr o m a n n e x u r e i n
a n n e x u r e i n o r d e r t o – to d r a w th is c o m p l e t e a n d c o n c i s e p i c tu r e , t h a n k
y o u . W e a r e n o w d e a li n g w i t h t h e M a r k e t D e m a n d S tr a t e g y M r C a ll a r d
a n d y o u s a i d a t 7 4 th a t th is s e c t io n o u tl in e s t h e d e v e l o p m e n t o f t h e

20

M a r k e t D e m a n d S tr a t e g y. Yo u m a y p r o c e e d .
M R F R A N C I S Q U E N T I N C A L LA R D :

Thank you.

M a y w e f ir s t tu r n

p l e a s e to A n n e x u r e 2 5 a n d I a m d e a li n g w i t h p a r a g r a p h 7 5 w h e r e th e
a c q u is i ti o n o f 1 0 6 4 l o c o m o tiv e s w a s p r e d ic a t e d o n t h e M D S w h ic h i n
t u r n p r e d ic a t e d a n e a r l y d o u b li n g i n g e n e r a l fr e i g h t v o lu m e s f r o m a
b u d g e t e d 9 1 .2 m il li o n t o n s i n 2 0 1 3 /2 0 1 4 t o 1 8 0 . 2 5 m i ll io n to n s i n

Page 31 of 247

20 MAY 2019 – DAY 96
2 0 1 9 /2 0 2 0 . I f I – w e c o u l d g o to A n n e x u r e 2 5 p l e a s e a n d i f w e c o u ld
s t a r t o ff o n p a g e 3 1 5 ?
A D V M A H L A P E S E L L O : W e a r e th e r e .
M R F R A N C I S Q U E N T I N C A L LA R D :
“ Su p p o r t i n g

D o c u m e n t a ti o n ” .

C o m m o d i ty

Growth”.

c o m m o d i ty

and

by

These
business

T h is 3 1 5 a n d 3 1 6 a r e h e a d e d

They

ae

ta b le s
u n it

the

a ls o

d e ta il

ti t le d
f a ir ly

expected

“Seven

Ye a r

e x t e n s i v e ly
growth

in

by

those

c o m m o d i ti e s – r a il tr a n s p o r t a b l e g r o w t h o f t h o s e c o m m o d i t ie s o v e r t h e
s e v e n y e a r p e r i o d . I f I m a y t a k e y o u p l e a s e f ir s t j u s t to t h e b o t t o m o f
10

page 316 …
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : T h e la s t l i n e s a y s :
“ To t a l M D S … ”
A n d t h e p r i n t is s m a l l b u t i n 2 0 1 3 / 2 0 1 4 th a t is :
“ 9 1 . 7 1 2 a n d i t g o e s th r o u g h t o 1 8 0 . 2 5 2 . ”
E ff e c t iv e ly a n d o f s o m e 8 9 m il li o n to n s t h is n e a r d o u b li n g in g r o w th .
T h i s i s a s u b s t a n t ia l g r o w th o v e r a s h o r t p e r i o d o f t i m e f o r s u c h a n
o r g a n i s a t io n .
ADV MAHLAPE SELLO:

20

So what we have at pages 315 and 316 are

t h e a n t ic ip a t e d v o lu m e o r is th e a n t ic i p a te d v o l u m e g r o w t h o v e r a s e v e n
y e a r p e r io d .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : M y q u e s t io n i s w a s t h a t a f a c to r i n a m e n d i n g
t h e o r i g in a l f le e t p l a n t o a c q u i r e 7 7 6 lo c o m o tiv e s t o n o w a c q u i r e 1 0 6 4 ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .

Page 32 of 247

20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : Yo u m a y c o n t in u e .
M R F R A N C I S Q U E N T I N C A L LA R D :
paragraph 76.

Thank you.

I refer

th e n t o

Th r o u g h A p r il 2 0 1 3 t o S e p t e m b e r 2 0 1 3 I h i g h li g h te d

v a r io u s – I h i g h l ig h t e d s h o r tc o m in g s in t h e c o m p il a ti o n o f th e M a r k e t
D e m a n d S t r a t e g y a n d th is u l ti m a t e l y r e s u l t e d i n t h e w o r k s h o p b e i n g
c o n v e n e d b y M r P il la y o n 1 9 A u g u s t 2 0 1 3 t o v a li d a t e th e M D S d e m a n d
a n d p r o d u c e a v a l id a te d tr a ffi c d e m a n d f il e . I n s u m m a r y w h a t I s e t o u t
h e r e w a s th a t i n te g r a ti n g t h e s e i n c r e a s e s in d e t a il I f e lt c e r t a i n
in c o n s is t e n c i e s th a t I c o u l d n o t r e c o n c i le a n d w is h to s a y – a n d s a i d i f
10

t h is tr a ff ic fi l e is i n c o n s i s t e n t i t a ff e c ts t h e v o lu m e s y o u w a n t t o c o n v e y,
it a ff e c ts t h e a s s e ts w e r e q u i r e , it a ff e c ts o u r o p e r a t io n s a n d w h a t w e
h a v e to h a v e i n p l a c e f o r o p e r a t i o n s .

W e n e e d to h a v e a c o h e r e n t

tr i a n g l e i f I c o u ld p u t it t h is w a y o f t h e tr a ffi c w e w is h to c o n v e y. T h e s e
a r e t h e a s s e ts w e h a v e a n d t h e s e a r e t h e o p e r a ti o n a l r e q u ir e m e n ts –
t h e o p e r a t io n a l p r o c e d u r e s w e n e e d t o e x e c u te t h a t tr a ffi c fi le .

If

a n y o n e – i f a n y o n e o f t h e m is o u t o f s y n c h r o n is m t h e n w e h a v e a
p r o b le m . W e e i t h e r h a v e to o m u c h v o lu m e o r w e d o n o t h a v e e n o u g h
a s s e ts o r w e h a v e t o o m u c h – to o m a n y a s s e ts .

If w e p r e d i c a t e t o o

high a market demand.
20

A D V M A H L A P E S E L L O : Yo u in d i c a t e a t p a r a g r a p h 7 7 th e n in s u m m a r y
t h a t y o u h i g h l ig h te d t h e i n c o n s i s t e n c ie s – f ir s tl y w h e r e m a r k e t t o n n a g e s
e x c e e d e d th e c a p a c i t y o f t h e m in e a n d s e c o n d ly w h e r e i n c o n s is t e n c i e s
w h e r e th e r a ti o o f c o a l a n d s t e e l d i d n o t a li g n .
M R F R A N C I S Q U E N T I N C A L LA R D : C e r t a i n ly. M a y I ta k e y o u th r o u g h
t h e t h r e e in c o n s is t e n c i e s i n b r i e f?

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

Thank you.

C o u ld I fi r s t tu r n in

t h a t r e s p e c t t o p a g e 3 2 2 p le a s e ? 3 2 2 a n d t h a t i s A n n e x u r e 2 7 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

T h i s w a s a n e m a i l to o n e o f my

m a r k e t in g c o l l e a g u e s a n d e ff e c ti v e ly it s a i d :
“ Pl e a s e lo o k a t t h e a t t a c h e d p r e s e n t a ti o n s .

Th e y

in d i c a t e th a t
h a s a n in s ta ll e d c a p a c it y o f 8 m il li o n to n s p e r
10

annum.

I t o o k t h o s e p r e s e n ta t io n s o u t o f t h e

a n n u a l r e p o r ts a n d w h a t w a s a v a i la b le o n t h e w e b
a n d th is i n s t a l l e d c a p a c i ty e x c l u d e d t h e s h u t d o w n s
w h ic h w o u ld b e p o t e n t ia ll y b e t a k in g p l a c e in
A r c e l o r M i t t a l b u t t h e s e v e n y e a r M D S in d ic a t e s
t h a t w e w il l r a m p u p to o v e r 1 0 m il li o n to n s o f ir o n
o r e t o A r c e l o r M it t a l . I t h i n k th e M D S i s o v e r s t a t e d
b u t w o u ld y o u c h e c k p l e a s e . ”
T h a t w a s th e to n n a g e g o in g i n to A r c e l o r M i t ta l .
ADV MAHLAPE SELLO:
20

B e f o r e y o u l e a v e 3 2 2 ju s t s o w e u n d e r s t a n d .

Yo u h a v e l is t e d t h e v a r i o u s p la n ts o f A r c e l o r M i tt a l?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

A n d y o u h a v e i n d ic a t e d h is t o r i c a ll y w h a t t h e

c a p a c i ty p e r p la n t h a s b e e n ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELL O: Should we add up those totals to understand

Page 34 of 247

20 MAY 2019 – DAY 96
t h e r e f o r e w h a t t h e a n n u a l c a p a c i ty o f A r c e l o r M i tt a l is ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s s o .
A D V M A H L A P E S E L L O : Th a n k s . S o y o u s a y t h a t t h e s e v e n – t h e M D S
n o t w i t h s t a n d in g t h e s e h is t o r i c a l f a c ts i n d i c a t e s a r a m p u p to o v e r 1 0
m il li o n t o n s o f ir o n o r e ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : A n d y o u q u e s t i o n th a t c o n c l u s io n ?
10

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

We cannot say we are going to

g iv e y o u 1 0 m i ll i o n s o f i r o n o r e w h e n y o u c a n o n ly p r o c e s s 8 m i ll i o n
tons.
A D V M A H L A P E S E L L O : Th a n k y o u . Yo u m a y p r o c e e d .
M R F R A N C I S Q U E N T I N C A L LA R D : M a y ( i n te r v e n e s ) ?
ADV MAHLAPE SELLO:

W e a r e n o w d e a l in g w i t h t h e i n – th e th r e e

in c o n s is t e n c i e s y o u h ig h l i g h t .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
20

ADV MAHLAPE SELL O: And you want to demonstrate where and how
t h o s e in c o n s is t e n c i e s a r i s e .

W h ic h a n n e x u r e a r e y o u l o o k i n g f o r ?

Perhaps I may help .
M R F R A N C I S Q U E N T I N C A L LA R D :

S o r r y – i t is o n e o n th e r a ti o o f

c o a l t o s te e l .
A D V M A H L A P E S E L L O : W i ll – l e t u s tr y p a g e 3 2 7 a n d s e e …

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : 3 2 7 ?
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

Th a n k y o u .

P a g e 3 2 7 , t h is is

a g a in a n e m a il t o m y m a r k e t in g c o l l e a g u e s b u t i t r e a d s :
“ H i , th e r a t i o o f c o a l t o s te e l in th e th ir d a n d t h e
la s t f o u r y e a r s i s o u t o f r a n g e . T h e p r e m i s e fo r t h is
s t a te m e n t is th a t i n th e m a k i n g o f s t e e l t h e r e is a
s p e c i f ic r a ti o h i s t o r ic a l ly w h ic h th e p l a n ts u s e o f
coal and iron ore to produce steel.
10

They – that

r a n g e i s c o n s is t e n t o v e r a l l t h e y e a r s . W h a t I … ”
ADV MAHLAPE SELL O: Sorry Mr Callard before you unpack that …
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.
A D V M A H L A P E S E L L O : Ta b l e .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

W h a t a r e th e c o n s e q u e n c e s o f t h e r a t io o f

c o a l t o s te e l b e i n g o u t o f r a n g e ? W h a t w o u l d b e th e c o n s e q u e n c e s ?
CHAIRPERSON :
M R F R A N C I S Q U E N T I N C A L LA R D : W e ll i f t h e r a ti o i s o u t o f r a n g e y o u
e i t h e r h a v e to o m u c h c o a l a n d n o t e n o u g h ir o n o r e o r y o u h a v e to o
20

m u c h ir o n o r e a n d n o t e n o u g h c o a l.
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : S o th e – t h e s m a l l p r in t – i f I m a y
t a k e y o u t o o n 3 2 7 th e s m a ll p r i n t a t t h e b o t t o m o f th a t s a y s “ r a ti o o f
c o a l t o i r o n o r e ” a n d i n t h e – i t r a n g e s y o u w i ll s e e fr o m 1 3 , 1 4 , 5 3 % t o
5 8 % , t o 4 5 , t o 5 0 to 5 5 to 5 4 , g i v e o r t a k e t h a t t h o s e a r e b o u n d e d b u t

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20 MAY 2019 – DAY 96
in th e l a s t y e a r ’s t h o s e r a ti o s c h a n g e d fr o m 6 1 to 6 1 % to 6 4 % t o 5 7 o r
6 7 a n d t h e l a s t y e a r is 7 1 % .

T h is w o u l d i n d i c a t e t h a t o n e o f t h o s e

c o m m o d i ti e s is o u t o f r a n g e , a n d c a n n o t b e a tr u e r e fl e c t io n o f w h a t w e
w o u ld b e tr a n s p o r ti n g a n d I j u s t w i s h t o h i g h l ig h t th is a n d s a y p le a s e
w e n e e d to c o r r e c t t h a t .
ADV MAHLAPE SELLO:

N o w i f w e r e a d th a t b y 2 0 1 3 , b y 1 3 /1 4 y o u

m e a n t th e y e a r 2 0 1 3 /2 0 1 4 w h ic h w o u l d b e t h e f ir s t e n tr y t h e f ir s t
column.
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
10

A D V M A H L A P E S E L L O : Th a t r a t i o s ta n d s a t 5 3 % .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : A n d t h e n i t in c r e a s e s a n d t h e r e a f t e r i t d r o p s
t o 4 5 t o 5 0 , t o 5 5 , t o 5 4 in t h e s u c c e e d i n g y e a r s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s s o t h e . . .( in t e r v e n ti o n )
A D V M A H L A P E S E L L O : Ye s ?
MR FRANCIS QUENTIN CALLARD:

S o r r y, th e r a n g e w e ’r e l o o k i n g a t

is i n t h e o r d e r o f 5 0 o d d p e r c e n t .
ADV MAHLAPE SELLO:

O k a y s o fr o m 2 0 1 9 t h e r a t io t h e n in c r e a s e s

fr o m 6 1 a n d n e x t y e a r 6 4 , 6 7 a n d 7 1 .
20

MR FRANCIS QUENTIN CALLARD :

Ye s , e ff e c t iv e ly t h a t s a y s y o u ’ r e

bringing in too much coal
A D V M A H LA P E S E L L O : A n d w h a t w o u ld b e t h e a v e r a g e c o r r e c t r a ti o i f
I m a y c a l l i t th a t , w h a t is t h e p r o p e r r a ti o o f c o a l to ir o n o r e ?
M R F R A N C I S Q U E N T I N C A L L A R D : I b e li e v e it s h o u ld b e o f t h e o r d e r
t h a t w e h a v e i n t h o s e o n e , t w o , th r e e , f o u r, f iv e , s ix y e a r s o f t h a t o r d e r

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20 MAY 2019 – DAY 96
o f t h e r a n g e o f 5 0 /5 5 % o f t h a t o r d e r w h ic h t h e y h a v e t h e r e . I a m n o t
g o i n g to b e p e d a n t i c a s t o th e e x a c t fi g u r e b u t I h a d n o p r o b l e m w i t h
t h e e a r li e r r a n g e s , i t w a s a t t h e l a s t f o u r y e a r s w e n t w a y o u t o f t h e
bounds of the preceding years.
ADV MAHLAPE SELLO:

N o w b e fo r e w e l e a v e t h i s ta b l e d o y o u k n o w

t h e s o u r c e o f th is i n fo r m a t i o n , w a s i t o b ta i n e d f r o m A r c e l o r M i t ta l i ts e l f
o r h o w – w h e r e d o w e g e t th is i n f o r m a ti o n fr o m ?
M R F R A N C I S Q U E N T I N C A L L A R D : T h i s s o u r c e I – th e s o u r c e o f th is
in f o r m a ti o n w a s t h e tr a ff ic f il e , t h e tr a ffic fi le w h ic h m a k e s u p t h e M D S
10

fi le a n d t h is w a s a n in t e r r o g a t io n o f t h a t p a r ti c u la r e l e m e n t s o f t h e M D S
fi le a n d a s k i n g d o t h e y p r o d u c e a c r e d ib l e tr a ffic f il e t h a t w e c o u l d u s e .
ADV MAHLAPE SELLO:

T h e n l e t m e ta k e a s te p b a c k a n d fi n d o u t

w h a t i s t h e s o u r c e o f i n fo r m a ti o n f o r th e tr a ffic f il e .
M R F R A N C I S Q U E N T IN C A L L A R D :

T h e s o u r c e o f in f o r m a t io n f o r th e

tr a ffic f il e is n o r m a l ly th e e x e c u t iv e b u s i n e s s m a n a g e r s , e a c h o n e i n
c h a r g e o f a p a r t ic u l a r b u s in e s s u n i t, l ik e w e h a v e a g r ic u l t u r e a n d b u l k
li q u i d , c o a l , e x p o r t i r o n o r m a n g a n e s e , s t e e l a n d c e m e n t , m i n e r a l
m i n i n g a n d c h r o m e a n d i n t e r m o d a l e a c h o f th o s e e x e c u tiv e m a n a g e r s
w o u ld b e r e s p o n s i b l e f o r p r o d u c i n g th e b u d g e ts a n d t h e tr a ffi c fi le i n
20

t h e ir b u s i n e s s u n it s f o r t h e ir c o m m o d i ti e s o v e r th e s e v e n y e a r p e r i o d .
A D V M A H L A P E S E L L O : A n d t h e n l a s t ly t h e b u s i n e s s e x e c u tiv e s w o u l d
t h e y r e f l e c t , w o u l d t h e y c a l c u la t e t h e ir o w n p r o j e c ti o n s o r w o u ld t h e y in
t h is i n s t a n c e b e i n e n g a g e m e n t w it h t h e c l ie n t , Ar c e l o r M i t ta l in th is
in s t a n c e , a n d h a v e o b t a in e d t h o s e f ig u r e s , th o s e p r o je c ti o n s f r o m
A r c e l o r M i t t a l o r w o u ld th a t b e t h e ir o w n c a lc u la t io n s i n t e r n a lly, d o y o u

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20 MAY 2019 – DAY 96
know?
M R F R A N C I S Q U E N T I N C A L L A R D : I c a n ’t s a y h o w t h e y o b t a i n e d th e
fi g u r e s , th e fa c t t h a t I p i c k u p t h e a n o m a l i e s i n t h e f ig u r e s g a v e c a u s e
f o r c o n c e r n a n d t h is , t h e w o r k s h o p w h i c h I s p o k e t o w a s a n a tt e m p t t o
g e t b a c k t o e n g a g e w i t h th e b u s i n e s s u n it m a n a g e r s t o r e v is i t t h e s e
fi g u r e s t o s e e i f th e y n e e d e d c o r r e c t io n , i f a n d w h e r e a n d h o w t h e y
n e e d e d c o r r e c t io n .
ADV MAHLAPE SELLO:

O k a y, a n d t h a t t h e n d e a ls w i th y o u r c o n c e r n

r e g a r d in g th e r a ti o o f c o a l t o o r e .
10

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s
A D V M A H LA P E S E L L O :

Yo u s a i d t h e r e w e r e th r e e i n c o n s is t e n c i e s ,

what is the second?
M R FR A N C I S Q U E N T I N C A L L A R D : A n d t h e th ir d i n c o n s is t e n c y is o n –
if w e m a y tu r n t o p a g e 3 2 9 p l e a s e w h i c h is A n n e x u r e 3 0 .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD :
Exxaro Leeupan Mine.

An d this was an example for

I f w e w e r e t o l o o k a t t h e fir s t l in e u n d e r t h e

li g h t b l u e h e a d i n g i t s a y s D e l m a s S id i n g E x x a r o C o a l A r e a d e s t i n a t io n
N e w C a s tl e a n d o n e w o u l d r e a d th a t a s b e i n g Ar c e l o r M it t a l.
20

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : W e h a v e i n th e o n e y e a r 1 .4 m i ll i o n
t o n s , t h e n e x t y e a r 1 . 7 m il li o n t o n s , t h e n a b l a n k , t h e n a b l a n k a n d t h e n
it ju m p s t o 5 m il li o n t o n s fo r f o u r c o n s e c u t i v e y e a r s .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QU ENTIN CALLARD:

M y comment on that to my

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20 MAY 2019 – DAY 96
c o l l e a g u e s w a s t h e ju m p in fi v e m i ll io n to n s in o n e y e a r t o N e w c a s t le is
o p t i m is ti c , t h e R O M t h a t is R a t e o f M i n e . . . ( in t e r v e n ti o n )
C H A I R P E R S O N : Wa s t h a t a c o m m e n t o r a q u e s t io n ?
MR FRANCIS QUENTIN CALLARD:

Well it was a comment or a

q u e s t io n t o h i m s a y i n g w h a t is g o in g o n b e c a u s e t h e R O M , t h e r u n o f
m i n e i s – I s a id th e m i n e c a n o n ly p r o d u c e 4 . 9 m il li o n to n s p e r a n n u m
a n d n o t th e s e v e n m i ll io n t o n s p r o j e c te d a s y o u w il l s e e w h ic h is a t t h e
b o t t o m li n e o f t h a t ta b l e , b e c a u s e a l l t h is i s c o m i n g fr o m o n e m i n e , a n d
I d i d s o m e i n te r n e t r e s e a r c h , l o o k e d a t t h e a n n u a l r e p o r t , th e r e w e r e n o
10

p l a n s to in c r e a s e t h e m m i n e c a p a c i ty w h ic h is a fa ir l y m a j o r e x e r c is e i f
I m a y a d d , a n d i f th e r e w e r e n o p u b li s h e d p l a n s t o i n c r e a s e m i n e
c a p a c i ty h o w c o u l d w e t h e n p r o je c t c o n v e y in g m o r e t h a n th e mi n e c o u l d
a c t u a ll y p r o d u c e a n d t h is w a s t h e e s s e n c e o f m y c o m m e n t t o m y
c o l l e a g u e s a n d th e s e w e r e t h r e e o f th e e x a m p l e s th a t I s e n t t o my
c o l l e a g u e s s a y i n g w e n e e d t o r e lo o k a t th e M D S a n d e n s u r e th a t e v e r y
li n e it e m i n f a c t is c r e d i b l e fo r t h e tr a c k t h a t w e a r e g o i n g t o c o n v e y.
A D V M A H L A P E S E L L O : A n d t h a t is s o b e c a u s e th a t in f o r m a t io n in p a r t
d ic t a t e s th e n u m b e r o f l o c o m o tiv e s n e c e s s a r y t o a c q u ir e ?
M R F R A N C I S Q U E N T I N C A L L A R D : T h e n u m b e r o f l o c o m o ti v e s a n d t h e

20

number of wagons.
A D V M A H L A P E S E L L O : A n d th e n u m b e r o f w a g o n s .
MR FRANCIS QUENTIN CALLARD : And the number of wagons, but yes
lo c o m o t iv e s a s w e ll .
ADV MAHLAPE SELL O : Now on the two examples we have gone
t h r o u g h w o u l d w e b e c o r r e c t in c o n c lu d in g th a t b o t h i n r e s p e c t o f

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20 MAY 2019 – DAY 96
E x x a r o a n d A r c e l o r M i tt a l t h e d o c u m e n ts p r o je c t a s h a r p i n c r e a s e i n
p r o d u c t io n fr o m th e t w o c li e n ts , w o u l d th a t b e a f a ir s u m m a t io n ?
MR FRANCIS QUENTIN CALLARD:

They project a sharp increase in

t h e d e l iv e r y o f r a w m a t e r i a l to t h e m i n e s , w h e t h e r th e y h a v e t h e ir
c a p a c i ty to p r o d u c e t h a t w a s , b u t p r o je c t a s h a r p in c r e a s e i n d e l iv e r y.
M a y I c o m m e n t a n d t a k e i t f o r w a r d t o th e p r o d u c t i o n ?
ADV MAHLAPE SELLO:

Ye s a b s o l u t e ly, w h i c h w o u l d m e a n a s h a r p

in c r e a s e i n d e m a n d o f o u r s e r v ic e s a s T F R .
M R F R A N C I S Q U E N T I N C A L L A R D : I t w o u l d b e a l o g ic a l s t e p t o ta k e
10

t h a t fo r w a r d y e s .
ADV MAHLAPE SELLO:

Yo u th e n h a v e in c l u d e d in y o u r – n o I w il l

r e s t a te , i f y o u c h a n g e to p a g e 1 9 c o n t i n u i n g o n t h i s t o p ic , y o u s ta t e a t
7 8 th a t a p r o c e s s w a s d e v e l o p e d t o d e r iv e a v a li d a t e d a n d e x e c u t a b l e
M D S f il e ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

C o u l d y o u c la r if y w h a t y o u m e a n i n t h a t

paragraph?
MR FRANCIS QUENTIN CALLARD :

C e r ta i n ly.

Because of these

c o n c e r n s w e n e e d t o , I f e l t w e n e e d e d t o p u t i n p la c e a p r o c e s s t o
20

v a l i d a t e th is tr a ffic f il e , a n d i f I c o u ld t h e n t a k e y o u p l e a s e t o p a g e o r
t o A n n e x u r e 3 0 , c o r r e c ti o n , A n n e x u r e 3 1 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : P a g e 3 3 3 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D : T h i s w a s t o v a r i o u s c o ll e a g u e s i n

Page 41 of 247

20 MAY 2019 – DAY 96
s e t ti n g u p a m e e t in g t o s e t u p t h i s p r o c e s s t o d e v e l o p a v a li d a te d
tr a ffic f il e , i t is f u r t h e r t a k e n f o r w a r d i n A n n e x u r e 3 1 , p a g e 3 3 5 w h e r e I
w r i t e to . . .( i n t e r v e n t io n )
ADV MAHLAPE SELLO:

I t h in k th a t ’s A n n e x u r e 3 2 , p l e a s e c h e c k

yours.
M R F R A N C I S Q U E N T I N C A L LA R D :

Sorry Annexure 32, apologies,

Annexure 32.
A D V M A H L A P E S E L L O : P l e a s e c o n t in u e .
M R F R A N C I S Q U E N T I N C A L LA R D :
10

P a g e 3 3 5 , t h is i s a m a il t o m a n y

c o l l e a g u e s a t t h e ti m e a n d i n e s s e n c e :
“ D e a r C o l le a g u e s ,
T h a n k s f o r t h e m e e ti n g , s o m e v e r y b r i e f n o t e s .”
A ll o f t h o s e i te m s a n d d e ta il a r e p r o c e s s t o d e v e l o p a v a l id a t e d tr a ffi c
fi le w h ic h w o u ld h a v e c o h e r e n c y in s p e c i fi c a ll y t h e w a g o n s a n d
lo c o m o t iv e s w e n e e d fr o m t h e c u s t o m e r p o i n t o f v i e w, fr o m t h e t r a ff ic
w e c o n v e y, o u t n e t w o r k c a p a b i li ty i s t h e – d o e s t h e s u p p li e r h a v e
s u ffi c i e n t c a p a b i li ty t o d e li v e r a s w e h a v e m e n ti o n e d i n t h e e x a m p l e o f
Exxara.

D o e s t h e s u p p li e r h a v e t h e a b il i ty t o lo a d t h e p r o d u c t ,

ir r e s p e c t iv e th a t h e c a n p r o d u c e t h e p r o d u c t c a n i t b e lo a d e d in t o t h e
20

r a i l w a g o n s in t h e r e q u is i te t i m e .

Can the receiver consume that

p r o d u c t , c a n A r c e l o r M i t t a l c o n s u m e th a t p r o d u c t fo r e x a m p l e .

Can

lo g i s t ic s i n t e g r a ti o n o r t h e d e p a r t m e n t f u n c t io n w h ic h w a s d e a li n g w it h
t h e a c t u a l o p e r a ti o n s , d o th e y h a v e t h e c a p a c i ty to d e liv e r o n t h e s e
t o n s . C o u l d w e b r i n g t h a t t o g e t h e r, a n d t h is m e e t in g d e t a i le d h o w w e
a c h i e v e a n d w h a t w e n e e d e d to d o t o a c h i e v e t h a t p r o c e s s .

Page 42 of 247

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

A n d t h i s y o u d o b e c a u s e i n y o u r v ie w t h e

tr a ffic fi l e s o n w h ic h t h e M D S is p r e d i c a te d h a d n o t b e e n v a l id a t e d , y o u
w a n t e d a p r o c e s s to v a l i d a t e th o s e fi g u r e s b e f o r e c o n c l u s i o n s d r a w n a t
t h e M D S c o u ld b e d r a w n ?
MR FRANCIS QUENTIN CALLARD:

Ye s I w a s c o n c e r n e d a t t h e – i f I

u s e th e p h r a s e “ t h e h o c k e y s t ic k e ff e c t o f t h e r a p i d i n c r e a s e ” a n d
s o u g h t to h a v e g r e a t e r c l a r i ty o n h o w t h e p r o c e s s w a s v a li d a te d a n d
w a s i t i n f a c t a f il e th a t w e c o u l d r e a l ly t r u s t . Th is i s c a r r i e d t h r o u g h
in t o A n n e x u r e 3 3 w h e r e w e – w it h c o m m e n t fr o m m y c o l le a g u e s w h e r e
10

w e n o w h a v e th e d e t a i l , t h e ir c o m m e n t s to i t , w e a ll a g r e e o n t h e
p r o c e s s . A n n e x u r e . . .( in t e r v e n ti o n )
ADV MAHLAPE SELLO:

N o w th e v a li d a t i o n t h a t y o u c a ll e d f o r w a s i t

carried out?
MR FRANCIS QUENTIN CALLARD :

I w o u l d l ik e to r e v e r t b a c k t o m y

s t a te m e n t , p a r a g r a p h 7 9 , th a t w h il e t h e M D S w a s f in e t u n e d a n d
o b v i o u s e r r o r s w e r e c o r r e c t e d th e r e w a s n o s u b s t a n tiv e c h a n g e in t h e
MDS.
A D V M A H L A P E S E L L O : C o n s id e r in g t h e p o s i ti o n a d o p t e d b y th e M D S
f o r y o u r r e c o ll e c ti o n w a s t h is c o n s is t e n t o r th a t h o c k e y s tic k e ff e c t th a t
20

y o u s p o k e o f, w a s th is c o n s is te n t w i t h t h e e c o n o m ic o u t l o o k g e n e r a lly ?
M R F R A N C I S Q U E N T I N C A L LA R D :

N o it w a s n o t c o n s is t e n t w i t h t h e

e c o n o m ic o u tl o o k , a n d f o r t h a t i f I c o u l d r e fe r t o A n n e x u r e I t h in k i t is
n u m b e r . . .( i n t e r v e n t i o n )
ADV MAHLAPE SELL O : 26, correct.
MR FRANCIS QUENTIN CA LLARD:

2 6 w a s a r e p o r t , i f I c o u ld c a ll i t

Page 43 of 247

20 MAY 2019 – DAY 96
t h a t , d e v e lo p e d b y a c o m m e r c i a l c o ll e a g u e , it c a m e t o m e u n d e r t h e
h e a d i n g “ e c o n o m ic a s s u m p t i o n s to s u p p o r t t h e s e v e n y e a r M D S ” t h is is
a t th e m i d d l e o f p a g e 3 1 8 , i t c a m e f r o m m y c o m m e r c i a l m a r k e t r e s e a r c h
a n d i n s i g h ts , o n e o f m y c o ll e a g u e s th e r e .
ADV MAHLAPE SELLO:

A n d j u s t f o r t h e r e c o r d w h a t ’s th e d a t e o f

that?
M R F R A N C I S Q U E N T I N C A L L A R D : T h e d a te o f t h a t r e p o r t is th e 9 t h o f
A p r il 2 0 1 3 , t h e d a t e o f th e e m a i l is 9 A p r i l 2 0 1 3 .
A D V M A H LA P E S E L L O :
10

A n d w a s t h is d u r i n g t h e t i m e t h e M D S w a s

being developed?
MR FRANCIS QUENTIN CALLARD:

Th e M D S h a d b e e n d e v e lo p e d

b e f o r e a n d t h e M D S w a s a r o ll in g p l a n s o i t w a s u p d a t e d e a c h y e a r.
A D V M A H L A P E S E L L O : A lr ig h t .
M R F R A N C I S Q U E N T I N C A L LA R D :

B u t th is w a s s p e c i fi c a ll y a t th e

ti m e w h e n w e w e r e p u t ti n g t h e M D S i n t o t h e 1 0 6 4 l o c o m o ti v e b u s in e s s
c a s e , s o i t w a s h i g h ly r e l e v a n t th a t th is i n f a c t s u p p o r t e d t h e – w e w e r e
lo o k in g f o r th e i n fo r m a ti o n t o s u p p o r t t h e M D S i n th e l o c o m o tiv e
business case.
A D V M A H L A P E S E L L O : Ye s .
20

M R F R A N C I S Q U E N T I N C A L LA R D : B u t i f w e t u r n t o p a g e 3 2 0 w h il e w e
h a v e t h i s d o u b li n g o f m a r k e t d e m a n d p r e d ic a t e d i n t h e M D S p a g e 3 2 0
t h e e c o n o m ic a s s u m p t io n s t o s u p p o r t t h e s e v e n y e a r M D S d o n o t
c o r r e la t e w i t h t h is s ig n if ic a n t d o u b li n g o f d e m a n d a n d a r e a d i n g o f p a g e
3 2 0 i n t h e d o w n g r a d i n g o f g lo b a l f o r e c a s t S A G D B g r o w t h h a s c o m e
d o w n , g l o b a l tr a d e is f o r e c a s t to s h r i n k , c o m m o d i ty p r i c e s a r e u n d e r

Page 44 of 247

20 MAY 2019 – DAY 96
p r e s s u r e , S A M i n in g Pr o d u c ti o n i n d e x w h i c h i s a k e y c o m p o n e n t o f t h e
m a t e r i a ls w e tr a n s p o r t fe ll b y a n d h a s f a l le n , e x c h a n g e r a t e f o r e c a s t ,
t h e w e a k e r r a n d w i ll s u p p o r t e x p o r ts a n d t o s o m e e x t e n t c o m m o d i ty
e x p o r t s b u t w i ll r a i s e t h e p r ic e o f i m p o r ts , t h is d i d n o t c o r r e l a t e w i t h th e
o p t i m is m i f I m a y p u t i t th a t w a y o f t h e d o u b l in g o f v o lu m e s i n th e M D S .
ADV MAHLAPE SELL O:

N o w i n y o u r s u p p le m e n t a r y s ta t e m e n t y o u

in tr o d u c e a f u r t h e r d o c u m e n t m a r k e d 2 6 A , C h a ir I a m h a n d in g o v e r y o u r
supplementary

s t a te m e n t ,

we

were

u p d a ti n g

it

with

th e

other

s u p p l e m e n t a r y s t a t e m e n t , I w il l s p e a k t o y o u la t e r.
10

CHAIRPERSON : Thank you.
A D V M A H L A P E S E L L O : S o C h a ir y o u n o w h a v e y o u r B B 4 C i t ’s i n t w o
p a r t s , i t ’s th e fir s t s u p p l e m e n t a r y s t a te m e n t a n d t h e s e c o n d w h ic h w e
a r e i n tr o d u c i n g t h i s m o r n i n g , a n d t h e s e c o n d r e la t e s t o t h e c o r r e c ti o n s
t h a t h a v e b e e n e ff e c t e d t o th e s t a te m e n t o f Mr C a l la r d .
CHAIRPERSON : Thank you.
A D V M A H L A P E S E L L O : Th e A n n e x u r e 2 6 A I r e f e r t o a s i n S e c ti o n 2 o f
B B 4 A , t h e s u p p l e m e n t a r y s t a t e m e n t a n d a c c o r d i n g t o y o u r s ta t e m e n t,
s u p p l e m e n t a r y s t a t e m e n t t o b e p r e c i s e . . .( i n te r v e n ti o n )
M R F R A N C I S Q U E N T I N C A L LA R D : It is p a g e 1 5 I b e li e v e .

20

ADV MAHLAPE SELLO:

A t p a r a g r a p h 9 y o u – o f t h e s u p p le m e n t a r y

s t a te m e n t y o u s ta t e :
“ I i n tr o d u c e a d o c u m e n t fr o m A n o j Si n g h d a t e d A p r i l 2 0 1 3 t o
t h e N a t io n a l Tr e a s u r y r e f l e c ti n g p r o je c t e d fl a t e c o n o m ic g r o w t h
as Annexure 26A.”
N o w i f w e g o t o 2 6 A o f t h e s u p p le m e n t a r y a n d t h a t w i ll b e a t p a g e 1 4 o f

Page 45 of 247

20 MAY 2019 – DAY 96
t h e s u p p l e m e n t a r y.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s p a g e 1 4 .
ADV MAHLAPE SELLO:

W o u l d y o u l ik e t h e n t o t a lk u s th r o u g h t h is

document?
MR

FRANCIS

QUENTIN

CALLARD:

C e r t a in ly, p a g e

15

of

the

s u p p l e m e n t a r y i s a n e m a i l fr o m M r A n o j S i n g h t o N a ti o n a l Tr e a s u r y a n d
it s a y s :
“ G o o d a f te r n o o n ,
K i n d ly r e c e i v e a t ta c h e d c o r r e s p o n d e n c e fr o m A n o j S in g h ’s
o ffic e .

10

Kind regards”
T h e d a t e i s 1 2 A p r il 2 0 1 3 . T h i s i s a r o u n d t h e s a m e ti m e a s I r e c e iv e d
t h a t e a r ly e m a il f r o m C o m m e r c i a l M a r k e ti n g R e s e a r c h , t h e k e y p o in ts
though

if

we

turn

over

to

page

–

the

f o l lo w i n g

page

which

s u p p l e m e n t a r y 1 6 a n d Mr S i n g h w r i t e s e ffe c t iv e ly t h a t :
“ Tr a n s n e t h a s n o t y e t a n n o u n c e d i ts r e v i s e d 1 3 / 1 4 c o r p o r a t e
p l a n b u t I w il l p r o v i d e y o u w i t h t h e s a li e n t f e a t u r e s o f th e
1 3 / 1 4 c o r p o r a t e p l a n to e n a b l e y o u t o a r t ic u l a te th e s e o n
N a t io n a l Tr e a s u r y ’s R o a d s h o w i n t h e w e e k s a h e a d .
20

S a l ie n t

f e a t u r e s o f t h e 2 0 1 3 c o r p o r a t e p l a n .”
I q u o te s p e c if ic a l ly fr o m t h e t h ir d b u ll e t :
“ T h e C P r e a d in g t h e c o r p o r a te p l a n ta k e s i n t o a c c o u n t t h e
p r e v a i li n g e c o n o m i c s l o w - d o w n a n d r e la t e d r e d u c ti o n i n o v e r a ll
c o m m o d i ty d e m a n d .”
T h e n e x t b u ll e t:

Page 46 of 247

20 MAY 2019 – DAY 96
“ Sl o w e r

e c o n o m ic

g r o w t h b o t h l o c a l ly a n d in t e r n a t io n a l ly

i m p a c ti n g n e g a tiv e ly o n r a il a n d p o r t c o m m o d i ti e s .

O v e r a ll

v o l u m e s o v e r th e s e v e n y e a r s r e m a in s s t a b l e b u t a t a s l o w e r
g r o w t h tr a j e c to r y i n i t ia ll y. ”
S o r r y t h e l a s t p o in t :
“The

MDS

is

s t il l

achievable

by

a d o p ti n g

revenue

d iv e r s i fi c a t io n s tr a te g i e s , c r o s s - p r o d u c ti o n in i ti a ti v e s a s w e ll
c a p i t a l i n v e s t m e n t p o r t f o l i o o p ti m is a ti o n p r o g r a m s .”
B u t t h e o v e r a ll t e n u r e o f t h is l e t t e r is t h a t i t s u p p o r ts a n d is c o n s is t e n t
10

w i t h t h e e c o n o m ic f o r e c a s t t h a t w a s p r o v i d e d b y C o m m e r c i a l M a r k e ti n g
R e s e a r c h a n d i n d ic a t e s th a t i t d o e s n o t s u p p o r t in m y m i n d t h e
o p t i m is m o f th e ( i n d i s t i n c t) M D S p l a n .
A D V M A H L A P E S E L L O : S o t h e n o u r t a k e o u t fr o m th e s e d o c u m e n ts is
t h e M D S p r o je c t e d a s h a r p i n c r e a s e i n d e m a n d .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELL O : Over the seven year period.
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H LA P E S E L L O :

Th e e c o n o m ic p r o j e c t io n s a s p r o v i d e d , o v e r

t h a t s e v e n y e a r p e r io d a s p r o v i d e d b y M a r k e t R e s e a r c h w it h in Tr a n s n e t
20

a n d b y t h e C h ie f F i n a n c i a l O ff ic e r a d v i s i n g Tr e a s u r y b o t h a n ti c i p a t e d
t h e c o n v e r s e , i n s te a d o f a n i n c r e a s e i n d e m a n d t h e r e w i ll b e a t b e s t ,
t h e d e m a n d w i ll s t a y s t a b l e , a t w o r s t i t w il l d e c r e a s e .
M R F R A N C I S Q U E N T IN C A L L A R D :

It c o u ld h a v e a ll o w e d f o r a

m a r g in a l m o d e r a te g r o w t h o n t h e tr a j e c t o r y w h ic h w e w e r e c u r r e n tl y a t ,
b u t c e r ta i n ly i t d id n o t s u p p o r t t h e h o c k e y s ti c k g r o w th th a t t h e M D S

Page 47 of 247

20 MAY 2019 – DAY 96
p r e d ic a te d .
A D V M A H L A P E S E L L O : B u t n o n e th e le s s t h e M D S c a r r i e d th r o u g h a n d
b a s e d o n t h e M D S t h e c a l c u la t io n w a s t h a t a f u r t h e r 1 0 6 4 lo c o m o tiv e s
a r e r e q u ir e d b y fr e ig h t o v e r t h e p e r io d o f s e v e n y e a r s ?
M R F R A N C I S Q U E N T I N C A L L A R D : I p u t t h a t in m y b e li e f i n p a r a g r a p h
8 0 t h a t t h e p r e s s u r e to a c h ie v e t h e M D S t a r g e t s a n d t h e s i g n i fi c a n t
c o n s e q u e n c e s o f c h a n g i n g t h e M D S m a d e a n y a t te m p t t o q u e s ti o n t h e
M D S u n li k e ly to s u c c e e d .

A n d y e s t h e 1 0 6 4 w a s p r e d i c a t e d o n th e

MDS.
10

ADV MAHLAPE SELLO:

W e t h e n g e t to t h e s e c ti o n w h e r e y o u n o w

d e a l s p e c i fic a l ly w i t h t h e 1 0 6 4 l o c o m o ti v e s .

Yo u s t a r t a t p a g e 1 9

p a r a g r a p h 8 1 , y o u i n d ic a te t o t h e C h a ir t h a t y o u w i ll d e a l w it h t h is
u n d e r fo u r s p e c if ic h e a d i n g s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : I f y o u c o u l d t a k e u s th r o u g h t h a t p a r t o f y o u r
t e s ti m o n y.
MR FRANCIS QUENTIN CALLARD:

Thank you Counsel.

C e r t a i n ly

C h a ir a n d I w o u ld q u o t e fr o m p a r a g r a p h 8 1 t h a t i n th is s e c t io n I w ill
o u t li n e t h e d e v e lo p m e n t o f t h e 1 0 6 4 b u s in e s s c a s e a n d t h e r o l e o f
20

M c K in s e y fu r t h e r g o t o s h o w, 8 1 . 2 , th a t h e d g i n g a n d e s c a l a ti o n w e r e
in c l u d e d

in

the

business

case,

para

8 1 .3

that

th e

accelerated

lo c o m o t iv e d e liv e r y w a s i n m y o p i n i o n il l - c o n s i d e r e d , a n d fo u r t h a t t h e
a d v a n c e p a y m e n t s h a d a n e g a tiv e i m p a c t o n Tr a n s n e t f in a n c e s .
P a r a 8 2 t h e p r o c e s s t o e v a l u a t e t h e 1 0 6 4 lo c o m o t iv e b id s is a
s e c t io n i n i ts o w n r i g h t .

Page 48 of 247

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

O k a y, l e t ’s d e a l w i t h t h e f ir s t o f y o u r t o p ic s ,

w h ic h i s t h e d e v e l o p m e n t o f th e 1 0 6 4 b u s i n e s s c a s e .
MR FRANCIS QUENTIN CALLARD:

O k a y, i f I m a y y o u th r o u g h t h a t

t h e n fr o m p a r a g r a p h 8 3 , t h a t t h e f ir s t 1 0 6 4 b u s i n e s s c a s e , l o c o m o t iv e
b u s i n e s s c a s e w a s d e v e l o p e d fr o m t h e w o r k o n th e m a r k e t d e m a n d
s tr a t e g y a n d th e lo c o m o t iv e fl e e t p l a n w h ic h I p r e v io u s ly o u t li n e d i n
p a r a g r a p h 2 1 a n d 2 2 . A g a i n p r e d ic a t e d o n t h e m a r k e t d e m a n d s tr a te g y
a n d t h e n e a r d o u b l in g o f g e n e r a l fr e i g h t v o lu m e s o v e r a s e v e n y e a r
p e r i o d a n d t h e r e p l a c e m e n t o f a g e d l o c o m o tiv e s t h a t w e r e b e y o n d th e i r
10

e c o n o m ic li f e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L LA R D :

T h e b u s in e s s c a s e d e v e lo p e d i n

A n n e x u r e 3 6 , w a s p r e s e n te d t o Tr a n s n e t Fr e i g h t R a il I n v e s t m e n t
C o m m i t t e e o n th e 9 t h o f M a r c h 2 0 1 2 , w it h a n E T C o f 3 8 1 4 6 m i lli o n o r
3 8 . 1 b i ll io n .
A D V M A H L A P E S E L L O : A n d E T C m e a n i n g e s t i m a t e d t o ta l c o s t .
M R F R A N C I S Q U E N T I N C A L LA R D : Es t i m a te d to t a l c o s t .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QU ENTIN CALLARD:
20

I d o n ’ t k n o w i f o n e w is h e s t o t u r n

t o A n n e x u r e 3 6 i t m e r e l y j u s t c o n f ir m s t h a t p o in t .
ADV MAHLAPE SELL O : I’m sure we accept that.
M R F R A N C I S Q U E N T IN C A L L A R D :

W e c a n p a s s o n t h a t, t h a n k y o u .

O n th e 9 t h o f M a r c h 2 0 1 2 M r .. .( i n t e r v e n ti o n )
ADV MAHLAPE SELL O : 19th I think.
M R FR A N C I S Q U E N T I N C A L L A R D : S o r r y 1 9 t h o f M a r c h t h a n k y o u , M r

Page 49 of 247

20 MAY 2019 – DAY 96
Gama

requested

an

update

version

to

th e

C a p i ta l

In v e s t m e n t

Committee.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : F u r t h e r d e ta il i s g i v e n i n A n n e x u r e
3 7 . A t th a t c a p i t a l i n v e s t m e n t m e e ti n g o f th e 2 1 s t o f M a y 2 0 1 2 i t w a s
d e c i d e d i n t e r a li a t h a t a n e x te r n a l p a r ty s h o u l d r e v ie w t h e 1 0 6 4
b u s i n e s s c a s e a n d p r o v i d e a r is k a s s e s s m e n t . A t i m e ta b le w a s o u t li n e d
a t t h a t s a m e m e e ti n g w h ic h e n v is a g e d t h e c o n tr a c ts b e in g s i g n e d i n
J a n u a r y 2 0 1 3 , th a t i s s e t o u t in A n n e x u r e 3 8 .
10

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D :

Not much happened, it was

f o ll o w e d b y a h i a t u s in th e lo c o m o t iv e p r o c u r e m e n t a s fr e i g h t r a i l
d e v e l o p e d a n o v e r a ll w a g o n fl e e t a n d i n fr a s tr u c t u r e p la n to c o m p le m e n t
t h e lo c o m o t iv e fl e e t p la n a n d th is is s e t o u t i n A n n e x u r e 3 9 .

The

i m p o r t a n t p o i n t b e y o n d t h i s w a s n o w t h e in t e r a c ti o n w i t h M c K in s e y.
ADV MAHLAPE SELLO:

Ye s .

M R F R A N C I S Q U E N T I N C A L L A R D : W h ic h s t a r te d I b e l ie v e o n th e 1 s t
o f M a r c h 2 0 1 3 , I d o n o t b e li e v e th a t I s a w a f o r m a l c l a r i f ic a t i o n o f t h e ir
r o l e b u t u n d e r s t o o d th e y w e r e e n g a g e d t o le a d t h e f u r t h e r d e v e l o p m e n t
20

of the 1064 business case.
ADV MAHLAPE SELLO:

B e f o r e y o u p r o c e e d , a t th is p o i n t w h a t w a s

t h e s t a t u s o f t h e 1 0 6 4 b u s i n e s s c a s e , w a s it c o m p l e te , w a s it a p p r o v e d
a n d i n r e s p o n s e t h a t y o u i f y o u m a y th e n i n d i c a t e w h a t r o l e M c K i n s e y
w a s i n t e n d i n g t o p l a y s p e c if ic a l ly i n r e s p e c t t o th a t b u s in e s s c a s e to
your understanding.

Page 50 of 247

20 MAY 2019 – DAY 96
MR

FRANCIS

Q U E N T IN

CALLARD:

In

terms

of

my

personal

in v o lv e m e n t t h a t is – I h a v e g iv e n m y p e r s o n a l i n v o l v e m e n t w h a t
h a p p e n e d in b e t w e e n i t i s m y u n d e r s t a n d i n g t h a t th e b u s i n e s s c a s e in
f a c t w a s a p p r o v e d , it w a s – ja P F M A a p p r o v a l w a s s o u g h t fo r t h e
b u s i n e s s c a s e a n d te n d e r s w e r e i n v i te d a n d i n f a c t b i d s w e r e o p e n e d
d u r i n g 2 0 1 2 , I w a s n o t p a r t o f th a t p r o c e s s .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

I w a s p a r t o f th e p r o c e s s a n d

in v o lv e d w i th D e p a r t m e n t o f P u b l ic E n t e r p r is e s in Wa g o n B u s i n e s s c a s e
10

a n d t h e o v e r a l l a p p r o v a l o f t h e w a g o n i n fr a s tr u c tu r e a n d l o c o m o t iv e
fl e e t p la n s p e r s e b u t I h a v e n o t d e ta il e d t h a t in h e r e .
ADV MAHLAPE SELLO:

So on the 1st of March 2013 the RFP was

is s u e d a n d b i d s h a d a lr e a d y b e e n c a ll e d f o r ?

I s th a t w h a t y o u a r e

s t a ti n g o r y o u d o n ’ t h a v e a r e c o l le c t i o n w a s t o t h a t?
MR FRANCIS QUENTIN CALLARD:

M a y I j u s t g o b a c k to , m a y I ju s t

r e fe r t o a n it e m .
A D V M A H LA P E S E L L O : Yo u m i g h t n o t h a v e , I a m t r y i n g t o u n d e r s ta n d
w h a t t h e r o l e o f M c K i n s e y w a s i n t e n d e d t o b e a t th is j u n c t u r e , a r e y o u
a b l e t o s h e d li g h t o n t h a t ?
20

M R FR A N C I S Q U E N T I N C A L L A R D : O k a y, a lr i g h t , t h e r o le o f Mc K i n s e y
b e c a u s e t h e b u s i n e s s c a s e , th e a b s o l u t e b u s i n e s s c a s e h a d n o t b e e n
a p p r o v e d b y th e b o a r d , th e r o le o f M c K in s e y n o w w a s t o t a k e t h e w o r k
w h ic h w e h a v e d o n e a n d tr a n s f o r m th a t i n t o a b u s i n e s s c a s e t h a t c o u l d
be approved by the Board.
ADV

MAHLAPE

SELLO:

O k a y,

please

Page 51 of 247

proceed

with

your

20 MAY 2019 – DAY 96
u n d e r s t a n d in g .
MR FRANCIS QUENTIN CALLARD : Thank you, so on the 1 st of March
– I b e li e v e t h e in t e r a c ti o n w it h Mc K i n s e y o n t h e 1 0 6 4 b u s i n e s s c a s e
started 1 March 2013.

I s t a t e h e r e I d o n o t b e li e v e I s a w a f o r m a l

c la r i fi c a t io n o f t h e ir r o l e b u t u n d e r s t o o d t h e y w e r e e n g a g e d t o l e a d t h e
f u r th e r d e v e lo p m e n t o f t h e 1 0 6 4 b u s i n e s s c a s e , a n d a fr e i g h t r a i l
lo c o m o t iv e t e a m w a s f o r m e d u n d e r a n e x e c u ti v e t o l e a d th a t t e a m . T h e
k e y p o in t is – c o r e p o i n t o f th is o r th e k e y p o i n t i s i n p a r a g r a p h 8 9 , th a t
t h e c o r e t e a m o f M e s s r s P r e g a s a P il l a y, J o h a n B o u w e r a n d m y s e l f h a d
10

a s o m e t i m e s s tr a in e d r e la t io n s h ip w i t h M c K in s e y.

Annexures, and I

r e fe r t o A n n e x u r e s 4 0 a n d 4 1 i n t h i s r e g a r d . .. ( i n te r v e n ti o n )
ADV MAHLAPE SELLO:

A n d – a n d t h o s e a n n e x u r e s p o i n t t o a d v is e

g iv e n to M c K in s e y a s r e g a r d s r a i lw a y s a n d h o w r a i lw a y s o p e r a t e .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CA LLARD:

A n n e x u r e 4 0 w h i c h is p a g e 3 5 9

fr o m m y c o l le a g u e i n fi n a n c e t o Mr M o h a m m e d M a h o m e d y, Vu y o K a h l a
a n d o t h e r s t h e w h o l e o f t h a t p a g e d e t a i ls c o n c e r n s o n th e ir in t e r a c ti o n
w i t h Mc K i n s e y a n d t h e s tr a in e d r e l a t i o n s h i p w e w e r e h a v i n g .
20

ADV MAHLAPE SELLO:

A n d w h a t is t h e m a i n t a k e o u t o f th a t

document?

W h a t w a s t h e m a i n c o n c e r n r e g a r d in g i n t e r a c ti o n s w i t h

M c K in s e y ?

I note if I may at page 359.

M R F R A N C I S Q U E N T I N C A L L A R D : 1 , 2 , 3 , 4 , 5 . If I m a y r e fe r y o u t o
p a r a g r a p h 5 o f 3 5 9 , p a r a g r a p h 5 o f th e e m a i l.
A D V M A H L A P E S E L L O : Ye s .

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : T h e M c Ki n s e y t e a m is a n d I q u o te :
“ Mc K i n s e y

team

is

fo c u s s i n g

on

two

s p e c i f ic

q u e s t io n s r e la t in g t o th e M D S v o l u m e s a s w e ll a s t h e
T F R r o a d t o r a i l s t r a t e g y.

Th e s e t w o q u e s ti o n s a r e

n o t t h e d r iv e r s o f t h e n e e d f o r lo c o m o t iv e s a n d w e r e
a g r e e d t o w i t h th e b o a r d a n d D P E i n t h e Tr a n s n e t
c o r p o r a t e p la n s i n t e r a c ti o n s a n d s h o u ld n o t b e t h e
backbone

of

e x p l a in in g

the

need

for

more

lo c o m o t iv e s . I r e f e r y o u to th e n e x t p a r a g r a p h . Th e
10

M c K in s e y t e a m a r e r e fu s i n g to t a k e d ir e c t io n o n th e
c a s e a n d s e e m t o b e a c o l la t in g o f d a t a t e a m .

The

T F R t e a m w i ll g l a d ly b e t h e c o n d u i t t h a t c a n n o t t a k e
r e s p o n s i b i li ty fo r a c a s e i f i t is a n i m p o r t – if i ts
in p u t s a r e i g n o r e d a n d n o c a s e is p r e s e n te d fo r
r e v ie w. Yo u r i n t e r v e n ti o n is r e q u ir e d . ”
ADV MAHLAPE SELLO:

Before you proceed.

Yo u j u s t r e a d u s

paragraph 5 and 6.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H LA P E S E L L O : P l e a s e h a v e r e g a r d t o p a r a g r a p h 4 t h a t w o u ld
20

a p p e a r t o h a v e s o m e le v e l o f r e l e v a n c e .
MR FRANCIS QUENTIN CALLARD:

C e r t a i n ly i t h ig h li g h t s t h a t a n d

t h a n k y o u f o r p o i n ti n g i t o u t . I q u o t e fr o m t h e r e p a r a g r a p h 4 .
“ I a m c o n c e r n e d t h a t t h e M c K in s e y t e a m is n o t f o c u s s i n g o n t h e ir
m a n d a t e t o v a l i d a t e a s s u m p t io n s i n th e o r ig in a l b u s i n e s s c a s e a n d
e n h a n c e th e c a s e s p e c i fi c a ll y fo c u s s in g o n th e q u e r i e s r a is e d b y

Page 53 of 247

20 MAY 2019 – DAY 96
TEFRIC, CAPEC and DPE.
A D V M A H L A P E S E L L O : S o t h a t w e c a n a c c e p t t h a t to m e a n t h a t t h e ir
m a in – th e i r m a n d a te w a s to v a li d a t e th e a s s u m p t i o n s ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t …
A D V M A H L A P E S E L L O : A n d th a t t h e y w e r e f a ili n g to d o a t th a t p o in t ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H LA P E S E L L O : A n d i n s t e a d th e y w e r e c o n c e n tr a ti n g o n o th e r
is s u e s ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
10

A D V M A H L A P E S E L L O : Yo u m a y p r o c e e d .
MR FRANCIS QUENTIN CALLARD:

I f o l lo w e d t h is u p w it h a n e m a i l

w h ic h is in A n n e x u r e 4 0 o r a d r a f t e m a il i n A n n e x u r e 4 1 . A n n e x u r e 4 1
p a g e 3 6 1 . I s u b s e q u e n tly d is c o v e r e d t h a t t h o u g h d r a f t e d I h a d n o t s e n t
t h is e m a il b u t th e s e n ti m e n ts r e m a i n t h e s a m e .
A D V M A H L A P E S E L L O : I f t h a t is th e c a s e s o A n n e x u r e 4 1 w a s n e v e r
s e n t t o th e i n t e n d e d r e c i p i e n t s ?
MR FRANCIS QUENTIN CALLARD:

N o I – it w a s i n m y – l e f t i n m y

outbox.
A D V M A H LA P E S E L L O :
20

So the view expressed there are unknown to

t h e in t e n d e d r e c i p i e n ts ?
M R F R A N C I S Q U E N T I N C A L L A R D : T h e v ie w s e x p r e s s e d a r e u n k n o w n
t o t h e i n t e n d e d r e c i p i e n t s b u t t h e y r e m a in w h e r e I f o l lo w o n my
c o l l e a g u e ’s e m a il a n d s a y :
“ I a m a ls o v e r y c o n c e r n e d ”
I q u o te . T h e s e c o n d p a r a g r a p h .

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20 MAY 2019 – DAY 96
“ Mc K i n s e y c h o s e t o r e s tr u c t u r e a n d r e w r i t e th e
b u s i n e s s c a s e a n d a s J o h a n h a s i n d i c a t e d to d a te i t
h a s b e e n a r e s ta t e m e n t o f w h a t a lr e a d y e x is ts .”
M y i n te r a c t i o n a n d I r e a d th e s e c o n d p a r a g r a p h .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :
“ My in t e r a c ti o n t o d a t e h a s l a r g e ly b e e n in f o r m i n g
them

a b o u t l o c o m o t iv e s , r a il w a y

o p e r a ti o n s

and

r a i l w a y o p e r a t i n g p a r a m e te r s i n c l u d in g t h e d i ff e r e n c e
10

b e t w e e n G T K a n d N T K a n d w h a t is a c l a s s 1
r a i lr o a d .”
A D V M A H L A P E S E L L O : A n d w h a t is t h e d i ff e r e n c e b e t w e e n a G T K a n d
N T K f o r o u r o w n i d e n t i fic a ti o n ?
M R F R A N C I S Q U E N T I N C A L L A R D : O n e i s g r o s s t o n n e k il o m e t r e s a n d
n e t t to n n e k il o m e tr e s fo r in t e r p r e ta t io n n e tt t o n n e k i lo m e tr e s a r e t h e
in c o m e p r o d u c i n g k i l o m e tr e s o r a r a il r o a d fo r t h e tr a ff ic w h o a c t u a l ly
c o n v e y. G r o s s to n n e k il o m e tr e s i s t h e a c t u a l to n n e s t h a t m o v e o v e r th e
r a i l w a y tr a c k i n c lu d i n g t h e w e ig h t o f t h e lo c o m o t iv e s a n d w a g o n s .
ADV MAHLAPE SELLO:

20

A n d th e v i e w w a s t h a t t h e y w e r e c o n fl a ti n g

the two concepts?
M R F R A N C I S Q U E N T I N C A L LA R D : N o t c o n f la t in g d i d n o t k n o w.
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CALLARD:

Th a t is w h a t I a m in t e r p r e ti n g

h e r e . If I m a y j u s t r e a d – t h e e m a il i s c l e a r i n s o m u c h .
A D V M A H LA P E S E L L O :

Ye s it i s c l e a r.

So – but then the point you

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20 MAY 2019 – DAY 96
m a k e a t A n n e x u r e s 4 0 – A n n e x u r e 4 1 is th a t a lt h o u g h y o u n e v e r d id g e t
t o s e n d i t e r r o n e o u s ly y o u s t ill h o l d t h e v i e w th a t y o u e x p r e s s e d i n t h a t
annexure?
M R F R A N C I S Q U E N T I N C A L LA R D : A b s o l u te ly.
ADV MAHLAPE SELLO:

Th a n k y o u .

We move on then to your

p a r a g r a p h 1 9 w h e r e y o u a t t a c h e m a i ls t o r e f l e c t a c h a n g e i n t h e
o r i g in a l b u s i n e s s c a s e c o n c e p t a s in tr o d u c e d b y M c K in s e y.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H LA P E S E L L O : A n d y o u d e a l w i t h t h a t a t y o u p a r a g r a p h 9 0 i f
10

y o u c o u ld t a k e u s f r o m t h e r e .
MR FRANCIS QUENTIN CALLARD:

I d e a l w i t h t h a t in p a r a g r a p h 9 0

a n d th a t i s p a g e 4 2 o r A n n e x u r e 4 2 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : W h ic h – a n d t h e s ta r t s o ff a t p a g e
ADV MAHLAPE SELL O : 364?
M R F R A N C I S Q U E N T I N C A L LA R D : 3 6 4 .
A D V M A H L A P E S E L L O : I t s t a r ts a t 3 6 3 o v e r l e a f it i s t h e a c tu a l – t h e
a c t u a l e m a il s .
MR FRANCIS QUENTIN CALLARD:
20

Ye s .

Th e o r i g i n a l b u s i n e s s c a s e

p r e d ic a te d d e li v e r y fr o m c o m p l e t in g b y 2 0 1 9 M c Ki n s e y c h a n g e d th is
b a c k t o o r c h a n g e d t h is o n t h e ir o w n a c c o r d to 2 0 2 0 a n d t h i s e m a i l o f
3 6 4 r e a l ly s a y s to t h e m y o u a r e n o t a u t h o r is e d t o c h a n g e th is b u s i n e s s
c a s e u n il a te r a ll y o n y o u r o w n s c o r e p l e a s e b r i n g i t b a c k t o t h e o r ig i n a l
ti m e li n e s o f t h e b u s in e s s c a s e .
A D V M A H L A P E S E L L O : S o t h e b u s in e s s c a s e r a n u n til 2 0 1 9 . 0 5 . 2 0

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D :

Ye s .

A D V M A H L A P E S E L L O : Th a t i s a s e v e n y e a r.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : P e r i o d a n d M c K i n s e y h a d c h a n g e d t h a t to r u n
to 2020.
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELL O : Did you get an understanding of what was the
c a u s e o f t h a t c h a n g in g i f I c a n b y M c K in s e y ?

W h a t in f o r m e d t h e m t o

c h a n g e t h e i r e n d d a te t o 2 0 2 0 a s o p p o s e d 2 0 1 9 ?
10

MR FRANCIS QUENTIN CALLARD :

I c a n n o t r e c a l l th a t w e w e r e – I

c a n n o t r e c a l l w h a t in f o r m e d th e m t o c h a n g e i t .
A D V M A H L A P E S E L L O : A n d t h e p o in t y o u m a k e h e r e is t h a t y o u a n d I
– b y y o u I m e a n p lu r a l t o o k is s u e w i t h t h a t c h a n g e a n d r e q u e s t e d a
reversion to 2019?
M R F R A N C I S Q U E N T I N C A L L A R D : Ye s . W h e n y o u s a y y o u t o o k i s s u e
m a y I r e a d t h a t a s y o u p lu r a l t o o k …
A D V M A H L A P E S E L L O : A b s o lu t e l y I a m s a y i n g y o u p l u r a l y e s a t t h e
team.
M R FR A N C I S Q U E N T I N C A L L A R D : Yo u p lu r a l to o k i s s u e w i th th a t a n d
20

M r G a m a a ls o t o o k i s s u e w i th t h a t – w i t h th a t c h a n g e i f I r e f le c t
c o r r e c t ly.
A D V M A H L A P E S E L L O : Ye s a n d s o – w a s th a t r e v e r s io n e ff e c t e d ?
MR FRANCIS QUENTIN CALLARD:

Ye s .

score to page 365 please.
A D V M A H L A P E S E L L O : Ye s .

Page 57 of 247

M a y I r e fe r y o u o n t h a t

20 MAY 2019 – DAY 96
MR FRANCIS QUENTIN CALLARD: And the middle of page 369 – 365
a n d I q u o te fr o m t h e e m a i l .

T h is w a s a m a il f r o m P r a g a s e n P il l a y t o

M c K in s e y I q u o t e :
“ N a s i e m p l e a s e n o te w e h a v e h a d a d is c u s s i o n w i th M r
G a m a th e C E o f T F R a n d t h e f o l lo w in g w a s th e o u tc o m e .
1. TFR cannot acc ept the budgeted amount for the 1064
b e e s c a l a te d d u e t o d e l iv e r y t i m e s h i f ti n g t w o y e a r s
b e y o n d t h e ir S V M M D S t i m e li n e . N o t e th e e ff e c t o n
ti m e v a l u e o f m o n e y b y n o t i n g t h e e ffe c t iv e t i m e
v a l u e o f m o n e y b y th e e x te n d e d p r o p o s e d d e li v e r y.

10

2 . T h e 1 0 6 4 is p u r c h a s e d to s u p p o r t a n d d e li v e r y o n t h e
a g r e e d M D S v o lu m e s . Th e q u e s t i o n is , w h a t is th e
v a l u e o f r e c e i v i n g 1 5 2 lo c o s b e y o n d 2 0 1 8 /2 0 1 9 t o
the MDS.
3. This assessment by

M c K in s e y w a s t o i n s is t i n

s p e e d in g u p th e p r o c e s s o f a p p r o v a l s o t h a t t h e
d e li v e r y s u p p o r ts th e v o l u m e r a m p u p . I n th is c a s e
it s e e m s n o t t o d o t h i s . ”
S o y e s c o ll e c ti v e y o u .
20

A D V M A H L A P E S E L L O : O k a y. A n d y o u e x p r e s s a v i e w th a t in g e t ti n g
M c K in s e y to u n d e r s ta n d a n d to r e v e r t t o t h e 2 0 1 9 w a s a r a th e r fr a u g h t
p r o c e s s a n d t h e e n g a g e m e n t w a s l e s s t h a n c o r d i a l a t ti m e b u t y o u w o n
the day?
MR FRANCIS QUENTIN CALLARD:

It was.

G iv e n t h is f o l lo w i n g

v ir t u a lly i m m e d i a t e ly o n t h is a n d o n o u r – m y p a r a g r a p h 9 1 t h a t o n

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20 MAY 2019 – DAY 96
Fr id a y t h e 1 2 A p r i l w e w e r e a s k e d t o t u r n t h is b u s in e s s c a s e a r o u n d f o r
t h e l o c o m o ti v e s t e e r i n g c o m m i t t e e m e e ti n g a n d t h e Tr a n s n e t b o a r d
m e e ti n g b y S u n d a y e v e n i n g . W e w e r e w o r k in g la t e a n d u n d e r p r e s s u r e
a t M c Ki n s e y ’s o ff ic e a n d t h e y w e r e j u s t n o t u n d e r s t a n d in g w h a t w e h a d
to achieve.

I v e n t e d a n d v i a m y fr u s t r a ti o n w h ic h m y c o ll e a g u e s

c a p tu r e d i n A n n e x u r e 4 3 . O n e m a y r e a d A n n e x u r e 4 3 .
“ H u m o r o u s a s t h is m i g h t b e i n h i n d s i g h t i t w a s
d e a d l y s e r i o u s a t t h e ti m e . ”
A n d i f I m a y j u s t q u o t e o n e s e n t e n c e fr o m p a g e 3 6 9 ?
10

“ So r r y Fr a n c is c a n n o t r e p e a t y o u r a n g e r o n m a i l .”
A D V M A H L A P E S E L L O : Th a t b a d ?
M R F R A N C I S Q U E N T I N C A L LA R D : It w a s th a t b a d .
A D V M A H L A P E S E L L O : O k a y. Yo u t h e n t u r n t o A n n e x u r e 4 4 w h ic h is
– it th a t – c a n I c a l l i t a n – t h e u p d a t e d c a s e – b u s in e s s c a s e fo ll o w i n g
M c K in s e y ’s c o n tr ib u t io n ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . A n d a s I q u o t e :
“ T h a t il l u s tr a t i n g t h i s f r u s t r a t io n w a s th a t o n t h e 1 6
A p r il w e r e c e i v e d a v e r s i o n o f t h e b u s in e s s c a s e fo r
u p d a ti n g . ”

20

A n d t h is w a s A n n e x u r e 4 4 a n d m a y I t a k e y o u p l e a s e t o A n n e x u r e 4 4
b e c a u s e t h e fi r s t a n d t h e f i f th p a g e s a r e r e le v a n t . A n n e x u r e 4 4 .
A D V M A H L A P E S E L L O : I t w i ll s t a r t a t p a g e 3 7 0 .
MR FRANCIS QUENTIN CALLARD :

3 7 0 is t h e n – c o u l d I a s k y o u

p l e a s e t o tu r n t o p a g e 3 7 1 .
A D V M A H L A P E S E L L O : Ye s .

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L L A R D : W h ic h w a s t h e fr o n t p a g e a n d h e r e
it s a y s t h e d a te o f s u b m is s i o n t h is is th e o n e o f t h e 1 6 A p r il .

If w e

c o u l d tu r n t h r o u g h t o p a g e 3 7 2 p l e a s e .
ADV MAHLAPE SELL O : We at 372.
M R F R A N C I S Q U E N T I N C A L LA R D : 3 7 2 a n d t h i s is t h e p u r p o s e o f t h e
b u s i n e s s c a s e . M a y I t a k e y o u t h r o u g h to t h e fi r s t b u l l e t p l e a s e ?
A D V M A H L A P E S E L L O : Ye s .
M R FR A N C I S Q U E N T I N C A L L A R D :

Th is is n o w th e p r i m e p u r p o s e o f

t h e b u s i n e s s c a s e t o p u r c h a s e 1 0 6 4 lo c o m o tiv e s . I t s ta t e s h e r e :
10

“ T h i s b u s i n e s s c a s e p r o v i d e s t h e r a t io n a l e to in v e s t
in p r o fi t a b l e e t c e t e r a . T h e n e w l o c o m o ti v e p u r c h a s e
w i ll c r e a t e 2 8 0 0 0 n e w a n d i n d ir e c t jo b s a n d 5 0
b i ll io n in e c o n o m ic i m p a c t t h r o u g h l o c a l s u p p ly
d e v e l o p m e n t .”
W h a t f o l lo w s t h e r e u n d e r li n e d is my c o m m e n t t o th is s a y in g t h a t th e s e
a r e to t a l ly – t h e s e a r e s e c o n d a r y o b j e c t iv e s . Th e p r i m a r y o b j e c t iv e i s
t o e n a b le T F R t o d e li v e r 1 7 0 m i ll i o n t o n n e s o n M D S b y 2 0 1 8 /1 9 .
M c K in s e y i n e s s e n c e w h a t I a m s a y i n g h e r e M c K i n s e y s e e m t o h a v e
lo s t th e p l o t i n w h a t w e w e r e tr y in g t o a c h i e v e . W e w a n t e d t o p r o v i d e a

20

b u s i n e s s c a s e f o r l o c o m o ti v e s t h a t w a s th e p r i m e r a t io n a l e o f t h e
business case.
ADV MAHLAPE SELLO : And now if we can just understand that. Did
y o u – b y y o u I m e a n Tr a n s n e t t e a m w o r k in g o n t h e b u s i n e s s c a s e h a v e
a n y d a t a t o s u p p o r t t h a t t h e b u s in e s s c a s e w o u ld c r e a t e 2 8 0 0 0 n e w
d ir e c t a n d i n d i r e c t jo b s ?

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : I t is n o t r e f l e c t e d i n m y te s t i m o n y
b u t Mr G a r r y P i ta a n d I h a d e x t e n s i v e d is c u s s io n s o n t h is o n e .
d is a g r e e d w i t h h is i n t e r p r e ta t io n o f 2 8 0 0 0 j o b s .

I

The basis which I

u s e d fo r t h a t d is a g r e e m e n t w a s t h a t t h e r e w a s a b o d y o f k n o w le d g e a t
t h e m o m e n t w h ic h s a i d th a t t o c r e a te o n e f u l l t i m e j o b r e q u i r e d 1 0 0 0 0 0
U S d o l l a r s i n v e s t m e n t in a c a p i t a l i n d u s tr y.

I c o u l d n o t c o r r e la t e t h a t

b o d y o f k n o w l e d g e w i t h th e i n v e s t m e n t w e s o u g h t in t h e l o c o m o ti v e s to
t h e s e j o b s . T h e e q u a t i o n s d i d n o t h o l d f o r m e . S o w e h a d e x te n s iv e
d e b a te o n t h a t b u t h e w o n .
10

A D V M A H L A P E S E L L O : A n d s e c o n d ly i t s t a t e s t h a t t h i s a c q u i s i t io n w i ll
in tr o d u c e

50

b il li o n

in

e c o n o m ic

im pact

through

local

s u p p ly

d e v e l o p m e n t . M y q u e s t io n is t h e t o ta l – th e e s ti m a t e d t o t a l c o s t o f t h is
tr a n s a c ti o n w a s 3 8 b i ll io n .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

I d o n o t k n o w i f i t is m y d i ff ic u l t y h o w d o I

r e c o n c i l e t h a t t o – w i t h 5 0 b il li o n e c o n o m i c i m p a c t t h r o u g h l o c a l s u p p ly
development?
M R F R A N C I S Q U E N T I N C A L LA R D : I c a n n o t e x p la in t h a t .
A D V M A H L A P E S E L L O : W i t h y o u r a s s is t a n c e ?
20

MR FRANCIS QU ENTIN CALLARD:
h o w t h e y a r r iv e d a t t h a t fi g u r e .
business case.

I c a n n o t e x p l a in .

I do not know

I t w a s n o t p a r t o f t h e l o c o m o ti v e

I c a n n o t e x p l a i n h o w th e y a r r iv e d a t a fi g u r e t h a t a n

in v e s t m e n t o f 3 8 b i ll io n i n to l o c o m o t iv e s w o u ld h a v e t h a t m u l t ip li e r
e ffe c t o f 5 0 b i ll io n i n th e l o c a l e c o n o m y.
A D V M A H L A P E S E L L O : W h e r e – a t t h e v e r y l e a s t 4 0 % o f t h e m w ill b e

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20 MAY 2019 – DAY 96
a s s e m b le d i n C h i n a ?
MR FRANCIS QUENTIN CALLARD:

O r 4 0 % w o u l d b e fo r e i g n c o n te n t

yes.
A D V M A H L A P E S E L L O : Ye s o k a y.
MR FRANCIS QUENTIN CALLARD:

A p p r o x i m a t e l y – b e tw e e n t h e

e l e c tr ic s a n d t h e d i e s e l.
A D V M A H LA P E S E L L O :

Ye s .

N o w i f w e m a y th e n c o n ti n u e – i f y o u

m a y c o n ti n u e w i t h y o u r t e s ti m o n y.

We are now at page 93 – ag

p a r a g r a p h 9 3 m y a p o lo g i e s .
10

M R F R A N C I S Q U E N T I N C A L LA R D : P a r a g r a p h 9 3 .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

Ye s .

M y c o ll e a g u e s a n d I

e x t e n s iv e ly r e v is e d t h e d o c u m e n t a n d w e r e tu r n e d i t o n t h e e v e n i n g o f
t h e 1 6 A p r i l 2 0 1 4 c o p y i n g Mr G a m a a n d M r S i n g h i n o u r r e p l y.
A n n e x u r e 4 5 j u s t i n d ic a t e s th a t t r a c e o f e m a i ls .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : Fo ll o w i n g o n t h a t o n t h e a f t e r n o o n
o f A p r i l – t h e 1 7 A p r il 2 0 1 3 m y c o ll e a g u e s Mr P r a g a s e n P il la y, J o h a n
B o u w e r a n d I s a t w i t h Mr S in g h a n d M c K in s e y t o r e v ie w o u r p r e v i o u s
20

in p u t s o n a p a g e b y p a g e b a s is .
ADV MAHLAPE SELLO: Hm.
MR FRANCIS QUENTIN CALLARD:

T h is w a s – w e w e r e t u r n i n g p a g e

b y p a g e g o in g t h r o u g h t h e m o d i fic a ti o n s .

W e h a d m a d e m o d i fi c a t i o n s

t o M c K in s e y h a d m a d e w h a t w e r e t h e y – w h a t w o u l d w e a c c e p t o f t h e ir,
what was accepted by ours.

A ll o u r i n p u ts w e r e a c c e p te d .

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Al l w e r e

20 MAY 2019 – DAY 96
a c c e p te d a n d w e c o u ld a g r e e o n t h o s e w e le f t o u t . W e c o u l d n o t a g r e e
w i t h t h e M r S i n g h o n t h e in c l u s io n o f t h e T E a n d f o r T E p l e a s e r e a d
Tr a n s n e t E n g i n e e r i n g s e c t io n s e t t in g o u t t h e r o l e o f T E - w e h a d a
d i ff e r e n t v i e w. My c o ll e a g u e s a n d I h a d a d i ffe r e n t v i e w to t h a t o f Mr
S i n g h a n d w e le f t th a t f o r M r S in g h a n d M r G a m a to r e s o l v e .
A D V M A H L A P E S E L L O : B e f o r e y o u p r o c e e d le t u s j u s t d is c u s s th e r e –
t h e Tr a n s n e t E n g i n e e r in g i s s u e .

T h e o r ig i n a l b u s in e s s c a s e d i d i t

c o n te m p l a t e a r o l e to b e p l a y e d b y T E in t h is tr a n s a c ti o n ? Wa s th e r e
p r o v i s i o n f o r T E i n t h e b u s in e s s c a s e ?
10

MR FRANCIS QUENTIN CALLARD:

W i t h o u t r e f e r e n c e to t h e o r ig in a l

business case?
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QU ENTIN CALLARD:

M y r e c o l l e c ti o n a n d w i t h o u t

v a l i d a t in g th is th r o u g h t h e r e s e a r c h o f th e b u s i n e s s c a s e s b u t th e r o l e
– th e p o s it i o n a d o p t e d c e r t a i n ly b y – th a t w e a d o p t e d w a s t h a t w e
s h o u l d b e n e u tr a l o n th e r o l e o f T E t h a t w e s h o u ld n o t b e p r e s c r ip t iv e
o n th e r o le o f Tr a n s n e t E n g i n e e r i n g .

I f a s u p p li e r o r a n o r i g i n a l

e q u ip m e n t m a n u f a c t u r e r w i s h e s to u s e Tr a n s n e t E n g i n e e r i n g t h a t
s h o u l d b e o f t h e ir o w n v o l i ti o n . T h e r e a s o n w e a d o p t e d t h a t w a s t h a t
20

p o s i ti o n w a s th a t i f w e w e r e to s p e c i f y t o a s u p p li e r t h a t t h e y h a d t o
u s e Tr a n s n e t E n g i n e e r i n g a s a s u b - c o n tr a c t o r a n d i n th e e v e n t t h a t
s o m e t h i n g w e n t w r o n g a lo c o m o t iv e w a s d e l a y e d o r t h e r e w e r e d e l a y s
f o r e x a m p l e c a u s e d b y t h a t s u b - c o n tr a c t o r w e w o u l d h a v e t h e – w e
w o u ld b e s u in g o r s e e k in g r e d r e s s f r o m t h e o r i g i n a l e q u i p m e n t
m a n u f a c t u r e r w h o i n tu r n w o u ld b e s e e k i n g r e d r e s s fr o m Tr a n s n e t fr o m

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20 MAY 2019 – DAY 96
a n o p e r a t in g d iv is io n o f Tr a n s n e t a n d c r e a ti n g a v ic io u s c y c le . H o w d o
w e s u e a c o n tr a c t o r w h e r e th e y in t u r n g iv in g a c o u n te r c l a i m t o o n e o f
o u r o p e r a t in g d iv is io n s fo r d e l a y in g th e m ?

That was why we were of

t h e v ie w th a t w e s h o u ld b e s i le n t a n d n e u tr a l o n th e r o l e o f T E . As I
s a i d t h e r e w e r e d i ff e r e n t v i e w s a t th e ti m e .
A D V M A H L A P E S E L L O : N o w y o u s a y y o u c o u ld n o t r e a c h a g r e e m e n t
w i t h M r S i n g h o n th is w h a t w a s h is v i e w a t t h e t i m e ? W h a t v i e w d i d h e
express as regards TE, the role of TE?
M R F R A N C I S Q U E N T IN C A L LA R D : I t is n o t r e c o r d e d a n d p l e a s e t h e s e
10

w e r e d i s c u s s io n s .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L LA R D :

I t is m y r e c o l l e c ti o n t h a t h e

f a v o u r e d a r o le o r p o s i ti n g a r o l e f o r T E h o w e v e r i t w a s d e f i n e d .
ADV MAHLAPE SELLO:

Did he advance any reasons for that to your

r e c o l l e c ti o n ?
M R F R A N C I S Q U E N T I N C A L LA R D : I c a n n o t r e c o ll e c t .
A D V M A H L A P E S E L L O : N o w w h e n y o u s a y t h e d e c i s i o n w a s t h a t t h is
is s u e b e l e f t fo r “ S in g h a n d G a m a to r e s o l v e ” is t h a t t o t h e C F O a n d th e
C E O t o r e s o lv e ?
20

M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

And to amend the business case based on

w h a t e v e r d e c is io n th e y a r r iv e a t ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t , c o r r e c t .
A D V M A H L A P E S E L L O : O k a y. A t –
CHAIRPERSON : Thank you.

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20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

Th a n k y o u C h a ir.

Yo u c o n c l u d e t h e n fr o m

p a r a g r a p h s 9 5 t o 9 7 th a t t h e b u s in e s s c a s e w a s n o w a s y o u s t a t e fu ll i n
t h e h a n d s o f G r o u p a n d a t 9 7 th a t i t w a s d is c u s s e d a t t h e L o c o m o t iv e
S t e e r i n g C o m m i t t e e m e e t in g o f t h e 1 8 A p r il .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H LA P E S E L L O :

Wa s t h a t y o u r f in a l – y o u r l a s t e n g a g e m e n t

w i t h t h e b u s i n e s s c a s e a s i t is ?
M R F R A N C I S Q U E N T I N C A L L A R D : T h a t w a s o u r la s t e n g a g e m e n t w it h
t h e b u s i n e s s c a s e o n t h e 1 8 A p r il y e s .
10

ADV MAHLAPE SELLO:

A n d a s a t t h e 1 8 A p r il th a t b u s i n e s s c a s e

a n t ic i p a te d a n E T C o f 3 8 . 9 i f my m e m o r y s e r v e s m e w e ll b u t 3 8 b il li o n ?
M R F R A N C I S Q U E N T I N C A L LA R D : 3 8 - Ye s .
A D V M A H L A P E S E L L O : I t w a s s ti ll a t 3 8 b i ll io n ?
M R F R A N C I S Q U E N T I N C A L LA R D : It w a s s ti ll a t 3 8 . 6 i f I …
A D V M A H L A P E S E L L O : 3 8 . 6 th a n k y o u . 3 8 . 6 b i ll i o n . Yo u th e n a f t e r
t h e n in tr o d u c e a to p ic h e d g in g a n d e s c a l a ti o n a n d y o u h a d s t a t e d a t
y o u r p a r a g r a p h 8 1 . 2 t h a t y o u w il l s h o w t h a t h e d g in g a n d e s c a l a ti o n
w e r e in c l u d e d i n th e b u s i n e s s c a s e ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
20

ADV MAHLAPE SELLO:

W e d e a l w it h t h a t f r o m p a g e 9 0 – a g fr o m

p a r a g r a p h 9 8 . I f y o u c o u l d t a k e u s t h r o u g h th a t p a r t o f y o u r t e s ti m o n y ?
M R F R A N C I S Q U E N T I N C A L L A R D : C e r t a in ly. A n d I w o u ld r e p e a t m y
p a r a g r a p h 9 8 t h a t o n e o f t h e c o n t e n ti o u s is s u e s t h a t h a s a r is e n i t h a s
b e e n i n t h e [ in d i s ti n c t ] fo r s o m e ti m e a s t o w h e th e r t h e 1 0 6 4 b u s in e s s
c a s e a n d b y e x te n s i o n t h e f in a n c i a l m o d e l i n c l u d e d h e d g i n g a n d

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20 MAY 2019 – DAY 96
e s c a l a t io n .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

A n d c e r t a i n l y I w il l s h o w t h a t

h e d g i n g a n d e s c a l a ti o n w e r e i n c lu d e d in t h e d e v e l o p m e n t o f th e
b u s i n e s s c a s e a n d th e fi n a n c i a l m o d e l b u t th is w a s mi s r e p r e s e n te d in
t h e fi n a l b u s i n e s s c a s e . T h is h a s b e e n c o v e r e d i n t h e M N S R e p o r t a n d
t h e Fu n d u d z i R e p o r t b u t I w il l j u s t g i v e s o m e a d d i t io n a l s u p p l e m e n t a r y
d e t a i l to t h a t fi n d i n g .
A D V M A H L A P E S E L L O : Ye s .
10

MR FRANCIS QU ENTIN CALLARD : Per paragraph 100 I was shocked
r ig i d w h e n i n te r v i e w e d b y W e r k s m e n s A t t o r n e y s a s p a r t o f t h e ir
in v e s t i g a t io n in t o t h e p r o c u r e m e n t o f th e 1 0 6 4 lo c o m o t iv e s . Th e ir fir s t
m a t t e r w a s t o s h o w m e a 2 5 A p r il 2 0 1 3 v e r s i o n o f t h e b u s in e s s c a s e
s t a ti n g t h a t th e 3 8 – 3 8 . 6 b il li o n e x c l u d e d t h e p o t e n t i a l e ff e c ts fr o m
h e d g i n g , fo r e x , e s c a l a ti o n a n d o t h e r p r i c e e s c a l a t io n s , i n t e r r o g a t e m e i f
I k n e w a n y th in g a b o u t i t .
A D V M A H LA P E S E L L O :

Please hold there.

C h a ir it i s p a r t o f t h e

s u p p l e m e n t a r y s ta t e m e n t e ff e c t in g t h e c o r r e c ti o n s .

T h a t d a te o f 2 3

A p r il r e a d s 2 0 1 4 a n d I th in k i t s h o u ld r e a d 1 3 .
20

M R F R A N C I S Q U E N T I N C A L LA R D : It s h o u l d r e a d 1 3 y e s .
C H A I R P E R S O N : O k a y.
A D V M A H L A P E S E L L O : Th a n k y o u C h a ir. P le a s e c o n ti n u e .
M R F R A N C I S Q U E N T I N C A L L A R D : A n d I r e p li e d th a t I w a s t h e o f t h e
fir m c o n v i c ti o n t h a t t h e b u s i n e s s c a s e i n c l u d e d f o r e x h e d g i n g , f o r e x
e s c a l a t io n a n d o t h e r p r ic in g e s c a l a ti o n s u b s e q u e n t ly i n te r r o g a te d b y

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20 MAY 2019 – DAY 96
r e c o r d s . W h a t fo ll o w s i s f r o m a n i n t e r r o g a ti o n o f m y r e c o r d s .
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CALLARD:

I n A p r i l 2 0 1 3 M c K in s e y fi n a li s e d

t h e ir o w n fi n a n c i a l m o d e ls . O n e o f t h e c o r e in p u ts w a s fr o m a s e r i e s o f
e m a i ls fr o m a r o u n d 1 0 A p r i l t o 1 2 A p r il 2 0 1 3 . M y a p o l o g i e s . R e c i p i e n t s
in it i a l ly w e r e M c K i n s e y a n d t h e c o r e t e a m b u t l a te r M r G a m a a n d S i n g h
a n d th is is e m a i l a n n e x u r e 4 2 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : P e r t in e n t p o i n ts i f w e m a y j u s t t u r n
10

u p t h a t e m a il p l e a s e w h ic h i s – it s t a r ts a t p a g e 3 6 4 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : T h e k e y p o in t s f r o m t h a t e m a il a r e
t h a t p r ic e a n d f o r e x e s ti m a t e s w e r e s o u r c e d f r o m e x p e r t i n t e r v i e w s .
B a s e lo c o m o t iv e p r ic e s w e r e s e t a t 2 0 1 3 / 1 4 w h e r e U S d o ll a r s 2 .6
m il li o n f o r d i e s e l a n d U S d o l la r s 3 . 5 m il li o n f o r e l e c tr ic l o c o m o t iv e s .
A D V M A H L A P E S E L L O : P l e a s e Mr C a ll a r d .
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.
A D V M A H L A P E S E L L O : I a p o lo g i s e . Yo u h a v e t a k e n u s t o p a g e 3 6 4 .
M R F R A N C I S Q U E N T I N C A L L A R D : S o r r y, s o r r y. Ye s a n d I a m r e a d in g

20

fr o m t h e – my s t a t e m e n t .
ADV MAHLAPE SELL O : Okay you went back to your statement?
M R F R A N C I S Q U E N T I N C A L LA R D : I w e n t b a c k to m y s t a t e m e n t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : A lr ig h t . Yo u a r e r e a d in g fr o m 1 0 2 1 to 1 0 2 5 .

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20 MAY 2019 – DAY 96
MR

FRANCIS

QUENTIN

CALLARD:

May

I s t il l r e a d

fr o m m y

s t a te m e n t ?
A D V M A H L A P E S E L L O : A b s o lu t e l y.
M R F R A N C I S Q U E N T I N C A L L A R D : O n 1 0 2 . 3 t h e c o n tr a c t s i g n i n g f e e
w a s a s s u m e d to b e 2 5 0 m il li o n f o r d ie s e l s a n d 3 0 0 m ill i o n f o r e l e c tr ic
lo c o m o t iv e s .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

M a y I a t t h is p o i n t j u s t c o r r e c t

s o m e t h i n g w h i c h I b e l i e v e I m is - s ta t e d o n Fr id a y a f te r n o o n w h e r e I s a id
10

t h e c o n t r a c t s i g n in g f e e m i g h t b e 3 m i ll io n f o r e le c tr i c lo c o m o t iv e s i f I
s a i d 3 m ill i o n .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

W h ic h I b e li e v e I d i d I s h o u l d

a c t u a ll y h a v e s ta t e d t h a t a s b e i n g 3 0 0 m i lli o n p e r t h e fi g u r e w h i c h w e
have here.
A D V M A H L A P E S E L L O : A n d ju s t s o th a t w e k n o w t h e n w h e r e y o u a r e
c o r r e c t in g i s t h a t w h e n y o u w e r e a t p a r a – p a g e 6 1 – p a r a g r a p h 6 1 ?
M R F R A N C I S Q U E N T I N C A L LA R D : P a r a g r a p h 6 1 .
A D V M A H LA P E S E L L O :
20

T h e l a s t s e n te n c e r e a d i n g t h e u p fr o n t

p a y m e n t p e r t h e 1 0 6 4 b u s i n e s s c a s e f o r e l e c tr i c lo c o m o t iv e s w a s a
s e t u p f e e o f 3 0 0 m i ll i o n .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s I b e li e v e I – in m y
A D V M A H L A P E S E L L O : Te s ti m o n y, o r a l t e s ti m o n y.
M R F R A N C I S Q U E N T I N C A L LA R D : Te s t i m o n y.
A D V M A H L A P E S E L L O : Ye s .

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : I s a i d 3 m ill i o n .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : It s h o u l d h a v e r e a d 3 0 0 m il li o n .
ADV MAHLAPE SELLO:

W e s h a l l c o r r e c t t h e tr a n s c r ip t a c c o r d in g l y.

M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u .
A D V M A H L A P E S E L L O : Th a n k y o u . W e a r e n o w a t 1 0 2 . 4 .
M R F R A N C I S Q U E N T I N C A L LA R D :

Ye s .

T h e h e d g in g c o s ts w e r e

a s s u m e d t o b e 8 % o f t h e l o c o m o tiv e c a s h f l o w a n d o n 1 0 2 . 5 Mc K i n s e y
a n d t h e i n d i v i d u a l fr o m M c K i n s e y o r M c K I n s e y i n s tr u c ts t h e r e th e ir
10

p e r s o n n e l to p u t t h e s e a s s u m p t io n s i n t o t h e f in a n c i a l m o d e l .

I was

p a r t y i n g t o v e t ti n g th e fi n a n c i a l a n d t h is w a s d o n e a n d t h e E T C
in c l u d e d h e d g in g a n d e s c a l a ti o n . A l l o f th e s e s ta t e m e n ts c a n b e tr a c e d
f o r m a l ly o r i n th a t A n n e x u r e 4 2 .
ADV MAHLAPE SELLO:

P l e a s e t a k e u s t o 4 2 s o t h a t w e c a n i d e n t i fy

t h e ir r e s p e c t iv e a r e a s w h e r e t h e y a r e .
M R F R A N C I S Q U E N T I N C A L LA R D : C e r t a i n ly.
A D V M A H L A P E S E L L O : Th a n k y o u .
M R F R A N C I S Q U E N T I N C A L LA R D : A n d s t a r ti n g w it h y o u r 1 0 2 .1
M R F R A N C I S Q U E N T I N C A L L A R D : S o r r y j a . M a y I tu r n y o u p l e a s e t o
20

page 366.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :
w a y d o w n t h e p a g e th e e m a i l r e a d s ?

A n d a p p r o x i m a te ly a t h ir d o f t h e
J D Fr a n c is I a m r e a d in g th e r e

fr o m t h e s e c o n d p a r a g r a p h q u o t e :
“ O u r U S D c o s ts o f 2 .6 m i l li o n p e r d ie s e l a n d 3 . 5

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20 MAY 2019 – DAY 96
m il li o n e le c t r ic w e r e d e r iv e d fr o m w o r k i n g w i th a M r
D a v i d P o t t e r h e w a s t h e e x p e r t v i e w.

We have

e s c a l a t e d t h e s e p r i c e s o n p r o j e c t e d U S in fl a ti o n a n d
c o n v e r te d b a c k to Z A R b a s e d o n t h e f o r w a r d r a t e
fr o m t h e Tr a n s n e t Tr e a s u r y. L e t u s k n o w i f y o u h a v e
any feedback there?”
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D :

T h a t w a s th e p o i n t I w a s m a k i n g

that
10

ADV MAHLAPE SELL O : At 102.
M R F R A N C I S Q U E N T I N C A L L A R D : H e d g in g a n d – o n t h e b a s e p r i c e .
O n t h e ta b l e b e l o w t h a t r i g h t a t th e b o tt o m w e h a v e a t a b l e a n d a t t h e
b o t t o m o f t h a t ta b le i t s a y s : F X F u t u r e s a n d U S in f la t io n i n d ic a ti n g th a t
t h o s e a r e i n c o r p o r a t e d in t h e t a b l e .
ADV MAHLAPE SELLO: Hm.
M R F R A N C I S Q U E N T IN C A L L A R D :

T h a t t a b l e is h e a d e d H e r e i s t h e

p r i c e fo r e x e s ti m a t e s u s e d 1 3 t h 1 4 t h p r i c e s s o u r c e d fr o m e x p e r t
in t e r v ie w s .
ADV MAHLAPE SELLO:
20

A n d t h a t – i t is fr o m t h a t t a b l e w e s e e t h e

U S D l o c o m o ti v e p r ic e f o r d i e s e l a t 2 . 6 a n d f o r e le c tr i c a t 3 . 5 ?
M R F R A N C I S Q U E N T I N C A L LA R D : .5 c o r r e c t .
A D V M A H L A P E S E L L O : W h ic h is w h a t y o u s ta t e a t y o u r 1 0 2 . 2 .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : Th a n k y o u .
MR FRANCIS QU ENTIN CALLARD:

I f I m a y tu r n o v e r t h e n t o p a g e

Page 70 of 247

20 MAY 2019 – DAY 96
367.
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD :

Just below that second table of

lo c o m o t iv e c a p i ta l c o s ts a n d I r e a d q u o te :
“ L o c o m o tiv e c a p i t a l c a s h f lo w s c h e d u l e a s s u m e s a
c o n tr a c t s ig n in g f e e o f Z A R 2 5 0 m i l li o n a n d Z A R 3 0 0
m il li o n f o r d i e s e ls a n d e le c tr i c s r e s p e c t iv e l y.”
A D V M A H L A P E S E L L O : O k a y.
M R FR A N C I S Q U E N T I N C A L L A R D : I f I m a y g o t o t h e – j u s t b e l o w t h e
10

next table please?
A D V M A H L A P E S E L L O : Ye s .
M R FR A N C I S Q U E N T I N C A L L A R D : H e d g i n g c o s ts . W e h a v e t h e ta b le .
The statement.
“Hedging costs are assumed to be 8% of loco cash
fl o w s .”
ADV MAHLAPE SELLO:

O k a y.

N o w y o u s a y i n g a ll th is i n fo r m a ti o n

w a s – it is p a r t o f t h e e m a i l c h a i n t h a t b o t h M r G a m a a n d M r A n o j S i n g h
b e c a m e p a r ty t o ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
20

A D V M A H L A P E S E L L O : A n d th a t w e fi n d a t p a g e 3 6 4 .
M R F R A N C I S Q U E N T I N C A L LA R D : P a g e 3 6 4 , y e s .
ADV MAHLAPE SELLO:

S o is i t y o u r - is i t y o u r c a s e t h e n t h a t i t

c a n n o t b e c o n te n d e d b y a n y o n e t h a t t h e b u s i n e s s c a s e d i d n o t in c l u d e
f o r e x a n d h e d g in g …
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .

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20 MAY 2019 – DAY 96
ADV MAHLAPE SELL O: Based on this annexure?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : O k a y. Yo u m a y p r o c e e d . W e a r e n o w a t y o u r
paragraph 103.
M R F R A N C I S Q U E N T I N C A L LA R D :

Ye s .

On

18 April

M c Ki n s e y

d is t r i b u t e d a P o w e r P o in t p r e s e n ta t io n w h ic h w a s d a t e d 2 0 1 2 / 0 4 /1 8
“ Pr o c u r e m e n t 1 0 6 4 L o c o m o t iv e s f o r G e n e r a l F r e ig h t B u s in e s s F in a l
P o w e r P o i n t .”
A D V M A H L A P E S E L L O : Ye s .
10

M R F R A N C I S Q U E N T I N C A L LA R D :

N o w tu r n o v e r t o 1 0 3 – i n m y

p a r a g r a p h 1 0 3 . 1 I e x tr a c t s li d e 1 2 o f t h a t p r e s e n t a ti o n .
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D :

A n d s li d e 1 2 o f th a t p r e s e n ta t io n

c le a r ly i n d i c a t e s t h a t :
“ Es c a l a ti o n

and

hedging

were

included

in

th e

e s ti m a t e d t o t a l c o s t .”
I w o u ld t a k e y o u t o th e p o i n t – to t h e it e m i n t h a t s l id e t h e fir s t ,
s e c o n d , t h ir d , fo u r t h o n e d o w n f o r e x .
“Current
20

forward

exchange

that they

are

USD

e x c h a n g e r a t e a t a n a v e r a g e R 11 ,0 0 / $ o v e r t h e
a c q u is i ti o n p e r i o d .”
A D V M A H L A P E S E L L O : A n d th is i s a M c K in s e y s l id e ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h i s i s a Mc K i n s e y s li d e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : N o w y o u g o to th e l a s t b lo c k t h e r e

Page 72 of 247

20 MAY 2019 – DAY 96
w h ic h i s c a ll e d t a r i ffs .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

S o r r y – c o r r e c ti o n .

The one –

p r i c e – th e o n e a b o v e i t p l e a s e - p r ic e w h ic h r e a d s :
“ U S $ 2 .6 m i ll io n , 2 5 . 2 m ill i o n f o r d i e s e l a n d U S $ 3 . 5
m il li o n /R 3 3 9

m i ll i o n

for

e l e c tr ic

assuming

50

p e r c e n t l o c a l is a ti o n a n d 2 p e r c e n t l o c a l is a t i o n .

10

R S A c o m p o n e n t e s c a l a te d w i t h i n in f la t i o n .

US$

component

and

e s c a l a te d

with

US

i n f l a t io n

c o n v e r te d b a c k t o Z A R b a s e d o n f o r w a r d e x c h a n g e
r a te .”
T h i s is i n t o t a l a g r e e m e n t w i t h w h a t h a s b e e n s e t o u t i n t h e e m a i ls .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

H o w e v e r s li d e 2 7 o f th e f in a l

p r e s e n t a ti o n .
ADV MAHLAPE SELLO:

B y t h e f i n a l p r e s e n t a ti o n it is t h e s a m e

p r e s e n t a ti o n a s t h e s l id e y o u j u s t r e f e r r e d t o a t 1 0 1 ?
M R F R A N C I S Q U E N T I N C A L LA R D : S a m e p r e s e n t a ti o n .
ADV MAHLAPE SELL O: At 103.1?
20

M R F R A N C I S Q U E N T I N C A L LA R D : T h e s a m e s li d e .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : O r s o r r y s a m e p r e s e n ta t io n b u t t h e
fi n a l s li d e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : H o w e v e r h a d b e e n c h a n g e d fr o m a

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20 MAY 2019 – DAY 96
p r e v i o u s v e r s i o n w h a t th e a d d it i o n o f a n d I q u o te :
“ Ex c lu d in g t h e p o t e n ti a l e ff e c ts fr o m f o r e x h e d g in g ,
f o r e x e s c a l a ti o n a n d o th e r p r ic e e s c a l a t i o n s .”
A D V M A H L A P E S E L L O : A n d y o u a r e r e a d in g i n t h e s e c o n d b o x o f t h a t
s li d e .
M R F R A N C I S Q U E N T I N C A L LA R D : B A D C r e c o m m e n d s t h e fo ll o w i n g t o
t h e B o a r d o f D ir e c t o r s f o r a p p r o v a l .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : “ T h e a c q u is i ti o n o f 1 0 6 4
10

lo c o m o t iv e s f o r t h e g e n e r a l f r e ig h t b u s i n e s s . Tw o ,
E T C f o r th e a c q u is i ti o n is e s t i m a te d a t 3 . 8 6 b il li o n –
s o r r y - 3 8 . 6 b i ll io n a s p e r t h e c o r p o r a te p l a n
e x c lu d in g p o t e n t i a l e f fe c t s f r o m f o r e x h e d g in g , f o r e x
e s c a l a t io n a n d o t h e r p r ic in g e s c a la t io n .”
A n d t h a t is s li d e 2 7 d o e s n o t c o i n c i d e w i t h s li d e 1 2 . I t is n o t g o in g t o
b e in s li d e 1 2 .
ADV MAHLAPE SELLO:

I n t h e s a m e p r e s e n t a ti o n t h e n M c K in s e y

s u g g e s t s t h a t t h e 3 8 .6 b i ll io n i n c l u d e fo r e x a n d h e d g i n g ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
20

ADV MAHLAPE SELLO:

Th a t w o u ld b e t h e ir s l id e 1 2 b u t i n th e s a m e

p r e s e n t a ti o n a t s li d e 2 7 t h e y s u g g e s t t h a t :
“ E TC f o r th e o p p o s i t io n i s e s t i m a t e d a t 3 8 .6 b i ll io n
as

per

the

corporate

plan

e x c lu d i n g

p o te n ti a l

e ffe c t s fr o m f o r e x h e d g i n g , f o r e x e s c a l a ti o n a n d
o th e r p r i c e e s c a la t io n s .” ?

Page 74 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : A ll t h i s i n o n e p r e s e n t a ti o n ?
M R F R A N C I S Q U E N T I N C A L LA R D : A l l t h i s in o n e p r e s e n t a ti o n .
A D V M A H L A P E S E L L O : O k a y. I f w e m a y t h e n p r o c e e d t o …
M R F R A N C I S Q U E N T I N C A L LA R D : 1 0 4 .
ADV MAHLAPE SELL O: 104.
M R F R A N C I S Q U E N T I N C A L LA R D :

A ls o o n 1 8 Fe b r u a r y Mc K i n s e y

e m a i ls Mr S i n g h th e b u s in e s s c a s e 2 0 1 2 / 0 4 / 1 8 “ 1 0 6 4 L o c o m o t iv e
B u s i n e s s C a s e _ Fi n a l P D F” .
10

ADV MAHLAPE SELLO: Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : T h i s i s in A n n e x u r e 4 8 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

I n te r a l ia t h e c o m m e n ts a n d I

q u o t e f r o m t h a t:
“ F in a l v e r s i o n f o r B A D C … ”
T h a t is B o a r d A c q u is i t io n s a n d D i s p o s a l s C o m m i t t e e .
“ … w i t h u p d a te d n u m b e r s ( n o w 2 .7 b i ll io n v e r s u s
N B V v e r s u s 0 . 3 b i ll i o n p r e v i o u s l y i n c l u d i n g it e m 1
…”
20

ADV MAHLAPE SELLO: Hm.
M R F R A N C I S Q U E N T I N C A L LA R D :

“ N e w fo r e x c u r v e b a s e d

o n Tr e a s u r y ’s i n p u t .”
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D : “ A d j u s t e d f l e e t e s t i m a te s
t o a d d u p t o 1 0 6 4 a s p e r J D ’s i n p u t t o d a y. Th r e e ,

Page 75 of 247

20 MAY 2019 – DAY 96
u p d a ti n g C O 2 s a v in g s b a s e d o n o n l y d ie s e l c h a n g e d
b a c k – c h a n g e d f r o m t o d a y ’s b a c k o f t h e e n v e l o p t o
– o f 1 3 m il li o n t o 5 m i ll io n b o tt o m u p a c c o u n t in g f o r
u p d a te d fl e e t p l a n .”
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

“ I te m 4 , u p d a t e d T C O -

To t a l C o s t o f O w n e r s h i p – a s a r e s u l t o f t h e f o r e x
change.

I te m 5 , n e w f u n d in g a n d f o r e x h e d g i n g

s e c t io n r e c e i v e d fr o m D a n i e t h is e v e n i n g .”
10

A D V M A H L A P E S E L L O : A n d th is i s fr o m M c K in s e y ?
M R F R A N C I S Q U E N T I N C A L LA R D : M c Ki n s e y t o Mr S i n g h .
ADV MAHLAPE SELLO:

A n d i t c o n fi r ms t h a t f o r e x a n d h e d g i n g a r e

part of the business plan?
M R F R A N C I S Q U E N T I N C A L LA R D : P e r th a t o u tl in e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

On

105

–

paragraph

105

–

M r Si n g h w a s t h e A c ti n g C h a ir o f t h e 1 0 6 4 l o c o m o tiv e s s t e e r i n g
c o m m i t t e e m e e t i n g h e l d o n t h e m o r n i n g o f 1 8 A p r il . T h e d r a f t m i n u te s
in c l u d e d th e A c t in g C h a i r m a n h ig h l i g h t e d in t e r a li a t h e f o l lo w in g . T h e
20

m i n u t e s a r e in c l u d e d a s A n n e x u r e s 4 9 a n d 4 9 A a n d t h e s e a r e e x tr a c t s
fr o m t h o s e m i n u t e s .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : Fo r s i m p le r e f e r e n c e . 1 0 5 .1 :
“ G C E - t h e G r o u p C h i e f E x e c u t iv e - h a s c o n fir m e d
that he has worked through the document sent to

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20 MAY 2019 – DAY 96
h i m o n 1 7 A p r i l 2 0 1 3 a n d h e i s s a t is fi e d w i th t h e
d o c u m e n t .”
ADV MAHLAPE SELLO:

W h i le w e a r e o n th a t b e f o r e y o u m o v e a n d

w h a t d o c u m e n t w o u l d th a t b e h e is r e fe r r i n g t o

- th e o n e o f

1 7 A p r il 2 0 1 3 ?
M R F R A N C I S Q U E N T I N C A L LA R D :

He is referring to the business

c a s e h e ld b e fo r e . M a y w e ju s t t h e n t u r n t o 4 9 a n d 4 9 A ?
A D V M A H L A P E S E L L O : O k a y. J u s t a m in u te . Yo u r 4 9 s t a r ts a t 3 8 3 ?
M R F R A N C I S Q U E N T I N C A L LA R D : 4 9 s t a r ts a t 3 8 3 .
10

ADV MAHLAPE SELLO:

A n d 4 9 A s t a r ts a t 3 8 6 a n d t h e d o c u m e n t a t

3 8 6 i s m in u te s o f t h e L o c o m o t iv e S t e e r i n g C o m m i t t e e ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : S o t h a t i s t h e d o c u m e n t t h a t G C E c o n f ir m s h e
h a s c o n s i d e r e d a n d h e is s a tis f ie d w i t h t h a t ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Ye s y o u m a y p r o c e e d .
M R F R A N C I S Q U E N T I N C A L LA R D : G o i n g o n t o 1 0 5 .2 :
“ T h e d i ff e r e n c e b e t w e e n th e d o c u m e n ts s u b m i tt e d
o n 1 7 A p r il a n d 1 8 A p r il 2 0 1 3 i n c lu d e i n te r a l ia … ”
20

A D V M A H L A P E S E L L O : Ye s .
CHAIRPERSON :
M R F R A N C I S Q U E N T I N C A L LA R D : R e a d i n g fr o m 1 0 5 . 3 i :
“ Si g n i fi c a n t a m e n d m e n ts – th e f o r e x r a t e s i n c l u d e d
in t h e m o d e l p r e v i o u s ly w e r e h i g h . Th e f o r e x r a t e s
have now been amended downwards which creates

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20 MAY 2019 – DAY 96
a n N B V o n t h e b u s i n e s s c a s e a t ( i n d is t in c t) r a t e o f
2 .7 b i ll io n .”
ADV MAHLAPE SELLO: Hm.
M R F R A N C I S Q U E N T I N C A L LA R D :

“Accordingly

the

0.3

b i ll io n N B V a t ( in d i s ti n c t) r a t e in t h e p r e v io u s
versions of the document has been amended to
R 2 . 7 b il li o n .

C o n s e q u e n tl y t h e b u s in e s s c a s e i s

n o w m o r e th a n r o b u s t .”
A D V M A H L A P E S E L L O : Ye s .
10

M R F R A N C I S Q U E N T I N C A L LA R D :

C le a r ly i n d ic a ti n g f o r e x i s i n t h e

business case.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : A s a n a s i d e th e – p a r a g r a p h 1 0 5 . 4 :
“ T h e M N S R e p o r t Vo l u m e 1 r e c o r d s t h a t t h e m i n u t e s
o f 1 8 A p r il 2 0 1 3 p l e a s e d a t 2 0 1 4 is d e a l t w i t h in t h e
s u p p l e m e n t a r y a n d i t is a c t u a ll y 2 0 1 3 … ”
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :
Steering
20

Committee

“ … o f t h e L o c o m o t iv e s

was

s ig n e d

on

–

in

S e p te m b e r 2 0 1 4 .”
G o i n g t o p a r a g r a p h 1 0 6 - t h e r e s o lu t io n o f t h e m e e ti n g h o w e v e r s t a t e s
n o t w i t h s t a n d in g w h a t w e h a v e i n t h e m e e t in g th e r e s o l u ti o n o f t h e
m e e ti n g h o w e v e r s t a t e s :
“The

S te e r i n g

C o m m i t te e

resolved

th a t

it

r e c o m m e n d s t h a t t h e G r o u p Ex e c u ti v e C o m m i t t e e

Page 78 of 247

20 MAY 2019 – DAY 96
a p p r o v e s t h e a c q u is i ti o n o f 1 0 6 4 l o c o m o tiv e s f o r
t h e g e n e r a l fr e i g h t b u s in e s s . E s ti m a t e d t o ta l c o s ts
o f t h e a c q u is i t io n o f 3 8 . 6 b i ll io n p e r t h e c o r p o r a t e
p l a n ( e x c l u d i n g t h e p o t e n ti a l e ff e c t s fr o m f o r e x
h e d g i n g , f o r e x e s c a l a t i o n , o t h e r p r ic e e s c a la t i o n s
a n d b o r r o w in g c o s ts ) . ”
A D V M A H L A P E S E L L O : I f w e – if w e t h e n c o u l d t u r n t o – t o th e a c t u a l
document what you quote at page – paragraph 106.1 appears at page
3 8 8 a t i te m 3 . 1 .2 . Is th a t c o r r e c t ?
10

M R F R A N C I S Q U E N T I N C A L LA R D :

3 8 8 t h e d o c u m e n t I a m q u o ti n g

fr o m . T h a t is c o r r e c t .
ADV MAHLAPE SELLO:
t w o d o c u m e n ts .

That is correct.

N o w – t h e n y o u c o n tr a s te d

T h is m i n u t e a n d t h e d o c u m e n t o f 1 8 A p r i l 2 0 1 3 fr o m

M c K in s e y.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

T h e M c K in s e y d o c u m e n t c o n fir m s t h a t f o r e x

a n d h e d g i n g w e r e i n c lu d e d in t h e o r ig i n a l b u s i n e s s c a s e .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Th is m in u te h o w e v e r r e fl e c t s a t 3 . 1 2 t h a t t h e
20

3 8 . 6 b i ll i o n E T C d o e s n o t i n c l u d e fo r e x a n d h e d g i n g a t 3 8 8 t h a t
q u o t a t i o n y o u g iv e a t y o u r p a r a g r a p h 1 0 6 . A t t h r e e - s o r r y - 3 1 2 – m y –
m y m is ta k e .
M R F R A N C I S Q U E N T I N C A L LA R D : I w a s …
A D V M A H L A P E S E L L O : 3 1 2 n o t 3 . 1 2 . I m is r e a d t h a t . I a p o l o g is e .
M R F R A N C I S Q U E N T I N C A L LA R D : T h r e e …

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20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

T h e r e s o l u ti o n a t p a g e 3 8 8 a t it e m 3 1 2 i s

in c o n s is t e n t w i t h t h e v e r y d o c u m e n t p r o v i d e d b y M c Ki n s e y o f 1 8 A p r i l
in d i c a t in g t h a t h e d g i n g – f o r e x a n d h e d g i n g w e r e i n c lu d e d i n t h e
business case?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

N o w i f w e ta k e it d a t e w is e i t w o u l d a p p e a r

t h a t t h e M c K i n s e y d o c u m e n t c o m e s a d a y a ft e r t h e m e e t in g .

The

m e e ti n g is f o r 1 7 A p r i l . M y a p o l o g i e s . T h e y a r e b o th 1 8 A p r il .
M R F R A N C I S Q U E N T I N C A L LA R D : T h e y a r e b o th 1 8 A p r il .
10

A D V M A H L A P E S E L L O : J a , t h e y a r e b o t h 1 8 A p r il .
M R F R A N C I S Q U E N T I N C A L LA R D : T h e y a r e b o th 1 8 A p r il .
ADV MAHLAPE SELLO:

T h e n p e r h a p s – th e n – t h e n i t i s a b i t

c o n fu s i n g . P l e a s e b e a r w i t h m e . G o t o y o u r p a r a g r a p h 1 0 5 .
M R F R A N C I S Q U E N T I N C A L LA R D : 1 0 5 .
A D V M A H L A P E S E L L O : A t 1 0 5 . 1 y o u r e c o r d th e r e t h a t t h e G C – a n d I
quote:
“The

GCE has

c o n fi r m e d

th a t h e

has worked

t h r o u g h t h e d o c u m e n t s e n t t o h i m o n 1 7 A p r il 2 0 1 3
a n d h e is s a tis f ie d w i t h t h a t d o c u m e n t. ”
20

Yo u i n d i c a t e d e a r li e r t h a t t h e d o c u m e n t r e fe r r e d t o i s t h e m i n u t e .

It

c a n n o t b e b e c a u s e t h e m e e ti n g o n l y t a k e s p l a c e …
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t d o c u m e n t …
A D V M A H L A P E S E L L O : O n t h e 1 8 t h . S o l e t u s c o r r e c t th a t . W h a t is
t h e d o c u m e n t r e fe r r e d t o t h a t t h e G C E c o n fir m s h e c o n s i d e r e d …
M R F R A N C I S Q U E N T I N C A L LA R D : W i t h …

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : A n d h e i s s a t is fi e d t h e r e w i th .
M R F R A N C I S Q U E N T I N C A L LA R D : T h e r e v i s e d b u s i n e s s c a s e .
ADV MAHLAPE SELLO:

T h e r e v is e d b u s in e s s c a s e , t h a n k y o u .

The

G C E b e i n g M r G a m a is t h a t t h e – w h o i s t h e G C E ?
M R F R A N C I S Q U E N T I N C A L LA R D :

N o t h a t w a s M r M o l e fe – G r o u p

C h i e f E x e c u tiv e .
CHAIRPERSON :

A r e w e d e a li n g h e r e o n c e a g a i n w i t h o ffi c i a l th a t is

q u i te s t r a n g e w h e r e w h e n y o u e x p e c t p e o p le t o k n o w s i m p l y a t a f a c t u a l
le v e l th a t t h i s i s th e p o s i ti o n b u t y o u h a v e d o c u m e n ts b e in g p r o d u c e d
10

t h a t s a y s s o m e t h in g d i ff e r e n t ?
M R F R A N C I S Q U E N T I N C A L LA R D :

T h a t is s o .

That is correct

M r C h a ir.
C H A I R P E R S O N : Ye s , y e s .
A D V M A H L A P E S E L L O : S o th e n w e c a n c o n c l u d e t h a t – t h a t S t e e r i n g
– th e L o c o m o t iv e S t e e r i n g C o m m i t t e e s r e s o l u ti o n i s f a c t u a l ly i n c o r r e c t
at 3.1.2 at page 388.

T h a t th e 3 8 .6 b il li o n E T C e x c l u d e s p o te n ti a l

e ffe c t s fr o m fo r e x h e d g i n g f o r e s c a la t io n a n d o t h e r p r ic e e s c a la t io n s . I
is n o t s u p p o r t e d b y a n y d o c u m e n t th u s f a r p u t b e fo r e u s a n d p u t to t h e
GCE and to Mr Gama?
20

M R F R A N C I S Q U E N T I N C A L LA R D :
s u b m i tt e d p r e v i o u s ly.

It is n o t s u p p o r t e d b y w h a t w a s

I t i s n o t s u p p o r t e d b y th e d is c u s s i o n i n t h e

b u s i n e s s c a s e i t s e l f. T h e c o n c l u s io n – t h e r e s o l u ti o n is in c o r r e c t .
ADV MAHLAPE SELLO:

And

if

anything

d e m o n s t r a t e s t h e d ir e c t o p p o s i te ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .

Page 81 of 247

th e

business

case

20 MAY 2019 – DAY 96
DV MAHLAPE SELLO: That the hedging and forex is included in …
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : I n th a t 3 8 . 6 b il li o n ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

T h a n k y o u C h a ir.

I – it is drawn to my

a tt e n ti o n t h a t i t is t e a ti m e .
CHAIRPERSON :

Thank you.

W e w i ll t a k e t h e s h o r t a d j o u r n m e n t a n d

r e s u m e a t h a l f p a s t 11 .
A D V M A H L A P E S E L L O : Th a n k y o u .
10

C H A I R P E R S O N : W e a d jo u r n .
REGISTRAR: All rise.
I N Q U I RY A D J O U R N S
I N Q U I RY R E S U M E S
C H A I R P E R S O N : Yo u m a y p r o c e e d .
ADV MAHLAPE SELLO:
C a ll a r d ?

Ye s C h a ir, w e m a y, a r e y o u r e a d y M r

Yo u d e a l th e n Mr C a l la r d fr o m y o u r p a r a g r a p h 1 0 7 w i t h t h e

c o n tr a d ic ti o n b e tw e e n t h e m i n u te a n d t h e d o c u m e n ts .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:
20

Ye s .

A n d y o u m a k e a n i m p o r t a n t i n t e r p r e ta t io n a t

paragraph 109.
M R FR A N C I S Q U E N T I N C A L L A R D :

Ye s , I r e c e iv e d a n e m a i l fr o m

M c K in s e y d a te d t h e 2 4 t h o f A p r il , t h is is A n n e x u r e 5 0 .
ADV MAHLAPE SELLO:

Ye s .

MR FRANCIS QUENTIN CALLARD:

Which is page 390, it comes from

M c K in s e y, it ’s a d d r e s s e d to a m o n g s t o th e r s m y s e l f , Pr a g a s e n Pi ll a y

Page 82 of 247

20 MAY 2019 – DAY 96
and it reads:
“ J D Fr a n c i s , c o n g r a t u la t io n s o n t h e B A D C a p p r o v a l , h o p e f u lly
t h e B o a r d m e e t i n g g o e s a s w e l l. ”
I in t e r p r e t i n t h is e m a il t h a t – w h ic h w a s d a t e d th e 2 4 t h o f A p r il – t h a t
M c K in s e y w e r e p a r t y t o t h e p r e s e n t a ti o n t o B A D C o n t h e 2 3 r d o f A p r il
a n d B A D C r e q u e s te d a f e w m i n o r u p d a t e s w h ic h a r e o u tli n e d in th is
A n n e x u r e 5 0 . T h e u p d a te s th e m s e lv e s a r e n o t ( i n d is ti n c t) t o t h e i s s u e
b u t o n p a r a g r a p h 11 0 o n th e 2 9 t h o f A p r i l 2 0 1 3 N a r e s h B u d a i c ir c u l a t e s
t h e l o c o m o tiv e b u s in e s s c a s e 2 0 1 3 - 0 4 - 2 9 1 0 6 4 1 5 h 0 0 l o c o m o tiv e
10

b u s i n e s s c a s e n o A n n e x u r e f o r r e v ie w a n d c o m m e n t .

Th is b u s in e s s

c a s e h a s b e e n u p d a t e d a s p e r th e in p u t f r o m B A D C o n t h e 2 9 t h o f A p r il
A n n e x u r e s 5 1 a n d 5 1 ( a ) a n d t h e p u r p o s e s ti ll r e a d s ,
“ Ac c o r d i n g ly i t is r e c o m m e n d e d – s o r r y m a y I r e p e a t , t h e
p u r p o s e a s s e t o u t o n p a g e 4 s ti ll r e a d s , a c c o r d i n g l y i t is
r e c o m m e n d e d t h a t t h e 1 0 6 4 l o c o m o ti v e s b u s in e s s c a s e b e
a p p r o v e d a t a c o s t o f 3 8 6 b i ll io n e x c lu d i n g b o r r o w in g c o s ts ” ,
O n t h e 3 0 t h o f A p r i l , t h i s is n o w t h e fo ll o w i n g d a y B u d a i e m a i ls
t h e fi le 2 0 1 3 - 0 4 - 3 0 0 9 h 0 0 l o c o m o t iv e b u s i n e s s c a s e n o A n n e x u r e P D F,
m a y I t a k e t o th e s u b - p a r a g r a p h , th e c o v e r p a g e i s d a te d 2 5 A p r il 2 0 1 3
20

it in d i c a t e s it is th e fi n a l v e r s i o n t o t h e B o a r d o f D ir e c t o r s a n d th e
purpose per page 4 reads,
“ Ac c o r d i n g ly i t is r e c o m m e n d e d t h a t t h e 1 0 6 4 lo c o m o t iv e s
b u s i n e s s c a s e b e a p p r o v e d w i th e s t i m a te d t o t a l c o s ts a t t h e
a c q u is i ti o n o f 3 8 . 6 b i ll io n a s p e r th e c o r p o r a te p la n ( e x c l u d i n g
t h e p o te n ti a l t h r e a ts fr o m F o r e x h e d g in g , F o r e x e s c a l a ti o n s

Page 83 of 247

20 MAY 2019 – DAY 96
a n d o t h e r p r i c e e s c a la t io n s ) ” . A s ig n if ic a n t C h a n g e .
ADV MAHLAPE SELLO:

S o t h e n y o u r A n n e x u r e 5 1 ( a ) is t h e B A D C

a p p r o v a l o f th e b u s in e s s c a s e o r i s t h e b u s in e s s c a s e a p p r o v e d b y
BADC?
MR FRANCIS QUENTIN CALLARD:

5 1 ( a ) i s a s I r e c e i v e d it fr o m t h e

– Mr B u d a i .
ADV MAHLAPE SELLO:

B u d a i , y e s a n d a s a t th e 2 9 t h A p r il 2 0 1 3 t h e

d o c u m e n t r e fl e c ts t h a t t h e 3 8 . 6 b i ll io n e x c l u d e s b o r r o w i n g c o s t s .
M R F R A N C I S Q U E N T I N C A L LA R D :
10

ADV MAHLAPE SELLO:

Correct.

N o w w a s t h a t f a c t u a ll y c o r r e c t?

M R F R A N C I S Q U E N T I N C A L LA R D :

T h a t w a s f a c tu a lly c o r r e c t , t h a t

w a s f a c t u a l ly c o r r e c t .
ADV MAHLAPE SELLO:

Okay then the same document at page – at

A n n e x u r e 5 2 a d d r e s s e d t o th e B o a r d o f Tr a n s n e t .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

T h e f in a l v e r s i o n o f th e b u s i n e s s c a s e .

M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

F in a l v e r s i o n .

Ye s .

N o w i n d ic a t e s a t 3 8 1 – 3 9 8 l a s t li n e t h a t t h e

3 8 . 8 b i ll io n a s p e r t h e c o r p o r a t e p l a n e x c lu d e s t h e p o t e n ti a l e ff e c t s fr o m
20

F o r e x H e d g i n g , F o r e x e s c a l a ti o n s a n d o t h e r p r i c e e s c a la t io n s .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

T h a t is d is t in c tl y d i ff e r e n t fr o m t h e f ir s t .

M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Correct.

D i s t in c t ly d i f f e r e n t .

D o y o u – a r e y o u a b le t o s h e d li g h t o n th e

e x p l a n a t io n r e g a r d i n g th is c h a n g e ?

Page 84 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D :

T h e o n l y e x p la n a ti o n – th e

m e c h a n is m f o r t h e c h a n g e .
ADV MAHLAPE SELLO:

Ye s .

M R FR A N C I S Q U E N T I N C A L L A R D :

N o t w h y th e c h a n g e b u t t h e

m e c h a n is m f o r t h e c h a n g e w a s t h a t t h e M E TA d a t a fo r t h is fi le w h ic h w e
a r e d e a li n g w i th u n d e r A n n e x u r e 5 2 , t h e c h a n g e d o n e .
ADV MAHLAPE SELLO:

Ye s .

MR FRANCIS QUENTIN CALLARD :

In d i c a te s t h a t i t w a s l a s t m o d i f ie d

o n t h e m a c h i n e o f Yu s u f M o h a m m e d fr o m t h e o ffi c e o f t h e G r o u p C h ie f
10

Fi n a n c i a l O ffi c e r, Tr a n s n e t o n 3 0 A p r i l 2 0 1 3 , p l e a s e n o t e 2 0 1 4 t h e r e
s h o u l d r e a d 2 0 1 3 , I ’v e a d d r e s s e d t h a t i n t h e s u p p le m e n t a r y a t 1 0 h 3 1
t h e t o ta l e d i ti n g t i m e w a s fo u r m i n u t e s a n d I i n c lu d e t h is a s A n n e x u r e
53.
ADV MAHLAPE SELLO:

O k a y s o y o u ’r e s u g g e s ti n g t h a t to

u n d e r s t a n d th is c h a n g e fr o m t h e o n e b u s i n e s s c a s e t h a t in d ic a t e d t h a t
3 8 . 6 b i ll io n o n ly e x c lu d e d b o r r o w i n g c o s t s t o t h e d o c u m e n t n o w r e a d i n g
t h a t it e x c l u d e s Fo r e x a n d h e d g i n g t o t h a t – fo r a n e x p l a n a t io n o f t h a t
c h a n g e w e s h o u l d t u r n t o M r Yu s u f M o h a m m e d ?
M R F R A N C I S Q U E N T I N C A L LA R D :
20

ADV MAHLAPE SELLO:

Correct.

T h e G r o u p C h i e f Fi n a n c i a l O ff ic e r o f

Tr a n s n e t a t th e ti m e ?
MR FRANCIS QUENTIN CALLARD:

N o o ff ic e o f t h e G r o u p C h i e f

Fi n a n c i a l O ff ic e r.
ADV MAHLAPE SELLO:

O ffi c e o f ?

M R F R A N C I S Q U E N T I N C A L LA R D :

Ja.

Page 85 of 247

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

S o w h a t a c t u a l p o s i ti o n d i d h e h o ld ?

MR FRANCIS QUENTIN CALLARD :

I c a n n o t s a y, I c a n n o t g iv e y o u

h is e x a c t t i tl e a t t h e t i m e e x c e p t t h a t h e w a s in t h e o ff ic e o f t h e G r o u p
C h i e f F in a n c ia l O ffi c e r.
ADV MAHLAPE SELLO:
CHAIRPERSON :

O k a y w e w il l d o s o .

T h e s e c o n t in u in g , g l a r in g , m a y b e o m i s s i o n s o r

in c o n s is t e n c i e s b a s ic a lly w h e r e t h e f a c t u a l p o s i t io n – th e tr u e f a c t u a l
p o s i ti o n is n o t g iv e n b u t a w r o n g p o s i ti o n is g iv e n a n d t o t h e B A D C o r
t o th e B o a r d o n e is t e m p t e d t o th in k t h a t m a y b e it w a s n o t n e g li g e n c e
10

o r i t c o u ld n o t h a v e b e e n n e g li g e n c e f o r s o m e b o d y w h o m a y h a v e s e e n
c e r t a i n d o c u m e n ts w h o m a y h a v e k n o w n d i ff e r e n t d o c u m e n ts o r c e r t a i n
d o c u m e n ts th a t s ta t e d t h e tr u e p o s i ti o n a n d s o o n a n d s o o n . I t m a y b e
s o m e t h i n g t h a t y o u a r e n o t a b l e t o s a y a n y t h in g a b o u t b u t h a v in g
lo o k e d a t s o m e o f t h is c o r r e s p o n d e n c e a n d h e s e q u e n c e o f t h e
m e m o r a n d a a n d d o c u m e n t s a n d k n o w i n g t h e m t o p a s s t h r o u g h c e r t a in
p e o p l e w h o h a v e to r e a d th e m a n a p p ly t h e ir m i n d to t h e m a r e y o u a b le
t o s a y w h e t h e r th e y c o u l d n ’ t h a v e b e e n – t h e w r o n g p o s it i o n c o u l d n ’ t
h a v e b e e n s t a te d d u e t o n e g l ig e n c e if s o m e b o d y h a d r e a d a l l th e
d o c u m e n ts t h a t t h e y c a n o r s h o u ld b e e x p e c t e d t o h a v e r e a d i n t h e li g h t

20

o f t h e ir r o l e i n t h e w h o le t h i n g ?
MR FRANCIS QUENTIN CALLARD:

I f I m a y r e p ly M r C h a ir, o n m y

p a r a g r a p h 11 4 a d d r e s s e s t h a t .
CHAIRPERSON :
MR

FRANCIS

Ye s .
Q U E N T IN

CALLARD :

Given

th e

extensive

c o m m u n ic a ti o n a n d r e s p o n s e t o h e d g i n g a n d F o r e x is s u e s in t h e

Page 86 of 247

20 MAY 2019 – DAY 96
f o r m a ti v e s ta g e o f th e f in a l b u s i n e s s c a s e , t o g e t h e r w i t h th e p a r ti a l
e d i ti n g o f t h e P o w e r P o i n t p r e s e n t a ti o n a n d th e b u s i n e s s c a s e , i t ’s m y
c o n s i d e r e d o p i n i o n th a t t h e a l t e r i n g o f t h e fi n a l b u s in e s s c a s e a n d
P o w e r P o i n t p r e s e n t a ti o n w i t h a p h a s e e x c l u d i n g p o t e n t ia l e ffe c ts F o r e x
h e d g i n g , F o r e x e s c a la t io n a n d o t h e r p r ic e e s c a l a ti o n s w a s a d e li b e r a t e
m is r e p r e s e n t a ti o n , t h i s c a n n o t h a v e b e e n a n a c c i d e n t .
CHAIRPERON:

Ye s , y e s , I t h i n k t h a t a d d r e s s e s m y q u e s t i o n q u i t e

p e r t i n e n tl y j a .
MR FRANCIS QUENTIN CALLARD:
10

W h a t t h is d o e s m e a n is w h e n

o n e e x c l u d e s F o r e x h e d g in g a n d F o r e x e s c a l a ti o n fr o m w h a t is g iv e n to
b e a n e s t i m a te d t o t a l c o s t , i t a ll o w s f o r i n c r e a s e s to t h a t e s ti m a t e d
t o t a l c o s t w h i c h a r e u n d e f in e d i n t h e b u s i n e s s c a s e .
CHAIRPERSON :

A n d to t h e e x t e n t th a t t h is w a s d o n e d e li b e r a t e ly o r

m a y h a v e b e e n d o n e d e li b e r a t e ly, lo g ic s a y s t h a t s o m e b o d y m u s t h a v e
w a n t e d t o in c r e a s e t h e a m o u n ts t h a t w o u l d b e p a i d b y Tr a n s n e t , fo r
whatever reasons?
MR FRANCIS QUENTIN CALLARD:

I t i s a r e a s o n a b le e x p l a n a ti o n o f

w h a t h a p p e n e d h e r e , i f I m a y c o n n e c t a n o t h e r d o t , th a t w e a r e a w a r e o f
t h e fi n a l p r i c e p a i d fo r t h e l o c o m o tiv e s w i t h o r w it h o u t t h e v a r i a t i o n s
20

fr o m 4 9 o d d b il li o n t o t h e 5 4 - w e ’l l d e a l w i t h t h e e x a c t f i g u r e s l a t e r b u t i t
m a y b e p u r e l y c o in c i d e n t a l t h a t a 5 0 b il li o n f ig u r e w a s m e n t io n e d i n o n e
o f t h e u p fr o n t s t a t e m e n t s b y M c K in s e y in t h e i n it i a l p a r t o f th e b u s i n e s s
c a s e , th e c o n n e c t i o n m a y b e h i g h ly s p e c u la ti v e I g r a n t y o u t h a t , b u t i t
is t h e r e .
CHAIRPERSON :

Thank you.

Page 87 of 247

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

A n d – s o w e s h o u l d u n d e r s ta n d fr o m y o u r

e v i d e n c e t h a t t h e e s t i m a te d to t a l c o s t , r e g a r d b e i n g h a d t o th e fa c t t h a t
t h e lo c o m o t iv e s w o u ld b e i m p o r t e d a n d t h e r e f o r e p a i d fo r i n f o r e i g n
e x c h a n g e , w o u l d h a v e t o – th e b u s i n e s s c a s e f o r th a t w o u ld h a v e to
in c l u d e t h e h e d g i n g a n d t h e F o r e x , i n o r d e r f o r t h e b u s i n e s s c a s e to b e
c o m p le t e ?
MR FRANCIS QUENTIN CALLARD:

M a y I d o a s li g h tly d i ffe r e n t

scenario please?
ADV MAHLAPE SELLO:
10

A b s o l u te ly.

MR FRANCIS QUENTIN CALLARD:
imported,

th e r e

are

imported

E le m e n ts o f a l o c o m o ti v e a r e

components

and

th e r e

are

local

c o m p o n e n ts , th e r a ti o o f i m p o r t e d l o c a l c o m p o n e n ts – o f l o c a l t o
f o r e i g n a m o u n t s o f a l o c o m o ti v e a r e s p e c i fi e d b y t h e D e p a r t m e n t o f
Tr a d e a n d I n d u s t r i e s a n d th e r e a r e d i ff e r e n t p e r c e n t a g e s f o r d i e s e l a n d
e l e c tr ic l o c o m o t iv e s . T h e i m p o r te d a m o u n t – t h e i m p o r t e d c o m p o n e n t s
o r w h a t is d e e m e d t h e i m p o r t e d f o r e i g n c o n t e n t , t h a t w o u l d b e s u b j e c t
t o t h e Fo r e x h e d g i n g , t h e l o c a l c o m p o n e n t w o u l d b e s u b j e c t t o l o c a l
e s c a l a t io n .
ADV MAHLAPE S ELLO:
20

S o t h e n t h e a m o u n t s p e c i fi e d i n th e

b u s i n e s s c a s e is i m p o r t a n t i n s o f a r a s t h e i m p o r te d c o m p o n e n ts a r e
c o n c e r n e d b e c a u s e i t i n d i c a t e s w h e t h e r t h a t is a c o s t – a n a c t u a l c o s t
t o Tr a n s n e t o r w h e t h e r t h e 3 8 .6 b il li o n o r a p e r c e n t a g e t h e r e o f s ti ll h a s
to include the Forex and the hedging.
MR FRANCIS QUENTIN CALLARD:

It w a s o u r c o m m o n p r a c t ic e t h a t

w h e n w e p r e s e n t e d a b u s i n e s s c a s e w e p r e s e n t e d a b u s in e s s c a s e w i th

Page 88 of 247

20 MAY 2019 – DAY 96
a n e s ti m a t e d t o t a l c o s t . T h a t i s t h e to t a l a m o u n t t h a t t h e o r g a n i s a t io n
h a d to p r e p a r e f o r a s a c a s h o u tl a y o v e r a g iv e n p e r i o d o f t i m e . I t w a s
t o t h e b e s t o f my k n o w le d g e a n d r e c o ll e c t io n in a l l t h e b u s i n e s s c a s e s
– I c a n n o t r e c o l l e c t h a v i n g p r e p a r e d a b u s in e s s c a s e th a t w o u l d h a v e
b e e n a c c e p t e d w i t h o u t g iv i n g t h e a p p r o v i n g a u t h o r i ty a n i n d i c a t io n o f
w h a t is t h e to t a l c o s t o f th e tr a n s a c t io n b e c a u s e w i t h o u t t h a t , t h e
a p p r o v in g a u th o r i ty, a t w h a te v e r l e v e l is u n c e r ta i n a s t o w h a t t h e f in a l
a m o u n t i s g o i n g to b e a n d a s s u c h i t m a y o r m a y n o t b e – i t m a y o r i t
m a y b e o u ts i d e o f th e ir d e l e g a t e d a u th o r i ty, t h a t is w h y I s p e c i fy in g a
10

t o t a l a n d e s ti m a t e d t o t a l c o s t w i t h a l l t h e u n k n o w n s in t o t h e f u t u r e w a s
a e s s e n t ia l e le m e n t o f a b u s i n e s s c a s e .
ADV MAHLAPE SELLO:

S o in a p p r o v i n g , a s p e r t h e b u s i n e s s c a s e

a p p r o v e d b y t h e B o a r d , a n E T C o f 3 8 .6 b i ll io n a s s p e c i fic a lly s ta t e d ,
e x c lu d in g t h e p o t e n ti a l e ff e c t fr o m F o r e x h e d g in g , F o r e x – a n d F o r e x
e s c a l a t io n , t h e B o a r d u n d e r s t o o d th a t t h e c o s t o f t h a t F o r e x h e d g in g
a n d F o r e x e s c a l a ti o n a r e s ti ll t o b e a d d e d t o t h e 3 8 . 6 b il li o n ?
MR FRANCIS QU ENTIN CAL LARD:

U n f o r tu n a te ly I c a n n o t s ta t e a s

to the Board understood.
ADV MAHLAPE SELLO:
20

O r t o h a v e u n d e r s t o o d fr o m t h a t s t a te m e n t .

MR FRANCIS QUENTIN CALLARD:

W hat they should have – they

s h o u l d h a v e u n d e r s t o o d fr o m t h a t s ta t e m e n t , y e s , t h e y s h o u l d h a v e
u n d e r s t o o d fr o m t h a t s t a te m e n t .
ADV MAHLAPE SELLO:

O k a y a n d t h e r e fo r e a n t ic i p a te d a r e t u r n , o f

le t ’s s a y th e E x e c u t iv e t o n o w s e e k a p p r o v a l f o r e s c a l a ti o n a n d
hedging.

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20 MAY 2019 – DAY 96
MR FRANCIS QUENTIN CALLARD:

I ’ m h e s i ta n t t o p l a c e m y s e l f i n

the mind of the Board.
ADV MAHLAPE SELLO:

Ye s .

MR FRANCIS QUENTIN CALLARD:

B u t a s a r e a s o n e d a p p r o v in g

o ffic i a l p r e s e n t e d w i t h a n u n k n o w n e s ti m a t e d to t a l a m o u n t a n d I d o n ’ t
k n o w w h e th e r t h e fi n a l f ig u r e is g o i n g t o b e i n s id e o r o u ts id e o f m y
d e l e g a t e d a u t h o r i ty, I w o u ld , i n th e m in d o f a r e a s o n a b l e a p p r o v i n g
o ffic i a l , I s h o u l d h a v e r e t u r n e d t h e b u s i n e s s c a s e a n d s a i d p l e a s e g i v e
m e w h a t is y o u r e s ti m a t e d to t a l c o s t s o t h a t I c a n b u d g e t c o r r e c tly f o r
10

t h e c a s h f lo w f o r t h e o r g a n is a ti o n o v e r th e y e a r s o f t h is p r o je c t a n d n o t
le a v e i t o p e n - e n d e d b u t I s t r e s s t h a t is h o w I b e l ie v e i t s h o u ld h a v e
been approached.
ADV MAHLAPE SELLO:
CHAIERPERSON:

I a c c e p t th a t , t h a n k y o u .

W h ic h g o e s t o s i m p l y s a y i n g , i n t h e c a s e o f t h e

B o a r d w h ic h m i g h t b e d i ffe r e n t , m a y b e if i t w a s a l o w e r b o d y i n t h e
case of the Board how can you approve anything when you don’t know
w h a t th e c o s t w i ll b e , th a t ’s … ( i n t e r v e n t io n ) .
MR FRANCIS QUENTIN CALLARD :

That is the nub of it whether it

w a s th e B o a r d , w h e t h e r i t w a s B A D C o r a n y l o w e r a p p r o v i n g a u t h o r i ty
20

t h e p r i n c i p l e t h a t I b e li e v e i s a d d r e s s e d h e r e , is h o w c a n I a p p r o v e
s o m e t h i n g w h e n I d o n o t k n o w w h a t is t h e fi n a l e s t i m a t e d c o s t , h o w e v e r
c o r r e c t o r in c o r r e c t t h o s e a s s u m p ti o n s m a y b e , g iv e m e a fi n a l c o s t t h a t
I k n o w th a t t h is is w i t h i n m y l i m i ts o f a u th o r i t y a n d I c a n t h e n a d d r e s s
t h e f in a l e s t i m a t e d c o s t . H e r e i f I’ m p r e s e n ti n g s o m e t h in g w i t h s u c h a n
o p e n - e n d e d a s p e c t a s F o r e x h e d g in g , F o r e x e s c a la t io n a n d o t h e r p r ic e

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20 MAY 2019 – DAY 96
e s c a l a t io n s , I w o u l d n o t k n o w w h a t I a m a p p r o v i n g , is m y i n te r p r e t a ti o n .
CHAIRPERSON :

Wa s t h e B o a r d t h e h ig h e s t a p p r o v in g a u t h o r i ty i n

r e s p e c t o f a n y p r o je c t s o r w e r e t h e r e c ir c u m s ta n c e s w h e r e t h e
a p p r o v in g a u t h o r i ty i n te r m s o f p r o j e c ts , w e r e t h e r e c ir c u m s t a n c e s
w h e r e , i f t h e p r o j e c t w a s b e y o n d a c e r t a i n a m o u n t it h a d to g o t o t h e
M i n is t e r r e s p o n s i b l e o r n o t?
MR FRANCIS QU ENTIN CALLARD:

T h a t is c o r r e c t , th e B o a r d w a s

t h e s e c o n d h ig h e s t a p p r o v in g a u t h o r i ty, t h e u l ti m a t e a p p r o v in g a u t h o r i ty
w a s t h e M i n is te r.
10

T h e B o a r d h a d d e f in e d l i m i ts in t e r m s o f it s

d e l e g a ti o n o f a u t h o r it y a n d th e s e w e r e u p d a t e d th r o u g h v a r io u s ti m e s
b u t t h e B o a r d h a d a n u p p e r l i m it a s t o i ts d e l e g a t io n o f a u t h o r i t y.
CHAIRPERSON :

W o u l d i t h a v e b e e n p o s s ib l e f o r t h e B o a r d , i n th e

c o n te x t o f w h a t w e a r e t a lk i n g a b o u t , w o u l d i t h a v e b e e n p o s s i b l e fo r
t h e m t a k e a v ie w t h a t , h a v i n g r e g a r d o f t h e c o s t th a t th e y ’v e b e e n t o ld
a n d h a v in g r e g a r d t o w h a t th e y w e r e b e i n g t o l d w a s e x c l u d e d , t h e r e i s
n o w a y i t c o u l d h a v e b e e n – t h e t o ta l c o s t c o u l d h a v e g o n e b e y o n d t h e ir
d e l e g a ti o n o f a u t h o r i ty ?
M R F R A N C I S Q U E N T I N C A L LA R D :
CHAIRPERSON :
20

T h is … ( i n te r v e n t io n ) .

L e t m e m a k e a n e x a m p l e j u s t t o m a k e s u r e th a t y o u

u n d e r s t a n d w h a t I’ m t a lk in g a b o u t . I f I m u s t a p p r o v e th a t y o u m u s t fly
t o D u r b a n I m i g h t n o t k n o w h o w m u c h y o u r t ic k e t is g o i n g t o c o s t ,
e x a c tl y b u t I’ v e g o t s o m e id e a t h a t i t’s n o t g o i n g to b e m o r e t h a n
R 2 0 0 0 0 . 0 0 a n d if m y a u t h o r i ty f o r w h a t e v e r y o u a r e g o i n g t o D u r b a n
a b o u t o r w h a t e v e r t h e p r o j e c t is , s u c h t h a t , t h a t p r ic e , e v e n t h o u g h I’ m
n o t t o l d b u t f r o m w h a t I k n o w t h a t t h e r e ’s n o w a y i t ’s g o i n g t o b e m o r e

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20 MAY 2019 – DAY 96
t h a n R 2 0 0 0 0 . 0 0 t h a t, th a t w o u l d s ti ll b e w i th in m y a u th o r i ty, I m ig h t
a d o p t a c e r ta i n a t ti t u d e b u t i t m a y b e d i ff e r e n t i f th e r e ’s a r is k th a t i t
c o u l d a c t u a l ly p u t it b e y o n d m y a u th o r i ty t h e n I m u s t – I m a y h a v e to
r e a l ly i n s is t . S o y o u d o u n d e r s t a n d t h e c o n te x t o f t h e q u e s ti o n ?
M R FR A N C I S Q U E N T I N C A L L A R D :
q u o t e i s a b s o l u te ly c o r r e c t.

Ye s i n d e e d a n d t h e e x a m p l e y o u

A t a l e v e l o f 3 8 .6 b i ll i o n i t w a s , h o w e v e r,

o u t s i d e o f t h e B o a r d ’s a u t h o r i ty a n d i t w o u l d h a v e h a d t o g o t o th e
s h a r e h o l d e r, ir r e s p e c ti v e o f t h e F o r e x e s c a l a ti o n o r n o t , i t w o u ld h a v e
g o n e t o t h e M i n i s t e r s h a r e h o ld e r.
10

CHARPERSON:

I t w a s a lr e a d y o u t o f t h e ir … ( in t e r v e n ti o n ) .

MR FRANCIS QUENTIN CALLARD:

A lr e a d y o u t o f t h e ir a u t h o r it y t o

approve yes.
CHAIRPERSON :

O k a y, o k a y.

ADV MAHLAPE SELLO:

T h e n m a y b e w e m i g h t a s w e l l d e a l w i th t h a t

p o i n t n o w t h a t i t ’s r a is e d , a r e y o u a w a r e w h e t h e r o r n o t th e M in is t e r ’s
a p p r o v a l w a s o b t a i n e d f o r th e 3 8 . 6 b il li o n ?
MR FRANCIS QUENTIN CALLARD:

Ye s t h e M i n i s t e r ’s a p p r o v a l w a s

obtained.
ADV MAHLAPE SELLO:
20

A n d th e M i n is t e r ’s a p p r o v a l w a s i n r e s p e c t

o f w h ic h – w h a t E T C t o y o u r r e c o l le c ti o n , w e p r o b a b l y w i ll g e t t h e r e
la t e r ?
M R FR A N C I S Q U E N T I N C A L L A R D :

I b e l ie v e I h a v e t h a t a s a – t h a t

it e m a s a p a r ti c u la r A n n e x u r e i n h e r e b e c a u s e I ’ m d e a li n g w i t h i t u n d e r
a n o t h e r …( in t e r v e n ti o n ) .
ADV MAHLAPE SELLO:

O k a y w e w i l l p a r k t h a t q u e s ti o n w e w i ll

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20 MAY 2019 – DAY 96
c o m e b a c k t o i t M s M o l e f e w il l fi n d u s t h e A n n e x u r e . W e m a y c o n t in u e
t h e n … ( i n te r v e n t io n ) .
CHAIRPERSON :

S o – s o r r y, s o t h e n I b e li e v e t h a t s o e v e n w i t h th e

B o a r d th e n c o n c e r n a b o u t a p p r o v a l b e i n g g i v e n w i t h o u t k n o w i n g , y o u
k n o w, t h e e x a c t to t a l c o s t o r a t le a s t a r e a s o n a b le e s ti m a t e , i t w o u ld b e
– i t w o u ld r a is e tw o is s u e s , o n e i s n o - o n e s h o u ld a p p r o v e a n y p r o j e c t
w i t h o u t k n o w in g w h a t i t w o u ld c o s t y o u k n o w.
M R F R A N C I S Q U E N T I N C A L LA R D :
CHAIRPERSON :
10

Ye s .

B u t a ls o th e n y o u c o m e t o t h e is s u e o f d e l e g a ti o n .

I f y o u r a u t h o r i t y i s l i m i te d t h e n i t’s a l l th e m o r e r e a s o n w h y y o u s h o u ld
k n o w w h a t t h e c o s ts w il l b e b e c a u s e y o u n e e d i t f o r t h a t p u r p o s e a s
w e ll . S o i t s e e m s t o m e i t ’s t w o f a c t o r s , y o u k n o w, b u t th e y a ll l e a d to
the same thing.
M R F R A N C I S Q U E N T I N C A L LA R D :

It ’s m y u n d e r s t a n d i n g Mr C h a ir

t h a t in t h e i n t e r e s t o f ti m e , b e a r in g in m i n d t h a t t h e A p r il 2 0 1 3 w h ic h w e
a r e d e a l i n g w i th n o w i s a lr e a d y a y e a r b e y o n d t h e ti m e w h e n t h e in i ti a l
b u s i n e s s c a s e w a s d e la y e d , t h e d e c is i o n w a s ta k e n b y t h e B o a r d ,
w h a t e v e r a u t h o r i ty, to is s u e th e r e q u e s t f o r p r o p o s a l s b e fo r e o b t a in in g
t h e M i n i s te r s a p p r o v a l t h a t t h e r e q u e s t f o r p r o p o s a ls – a n d i t w a s
20

in d i c a t e d to t h e t e n d e r s – t e n d e r e r s th a t th is w o u l d b e s u b j e c t to
M i n is t e r ia l a p p r o v a l b e i n g o b ta in e d w h i c h i t w a s s u b s e q u e n t ly a n d I –
t h a t w a s o b t a i n e d o n th e P M FA a p p r o v a l w a s o b t a i n e d o n th e 3 r d o f
S e p te m b e r 2 0 1 3 , I h a v e t h a t a s i t e m 1 5 7 .4 o f m y n o t e s t h a t w e h a d t h e
M i n is t e r ia l a p p r o v a l t o p r o c e e d w i t h th a t . T h a t o u tl i n e o f e v e n ts is s e t
o u t o n – s li g h t ly l a t e r i n m y t e s t i m o n y.

Page 93 of 247

20 MAY 2019 – DAY 96
CHAIRPERSON :

A n d w h o w a s t h e M in i s t e r r e s p o n s i b l e a t t h e ti m e ,

do you know?
M R F R A N C I S Q U E N T I N C A L LA R D :
CHAIRPERSON :

I t w a s M i n i s t e r G ig a b a .

O k a y.

ADV MAHLAPE SELLO:

T h a n k y o u C h a ir, o n t h a t q u e s ti o n th e

A n n e x u r e y o u w e r e l o o k i n g f o r w it h o u t d w e l li n g o n it , i s i t A n n e x u r e 8 2
a t y o u r p a g e 6 3 7 , t h a t w o u l d b e i n y o u r s e c o n d v o lu m e .
CHAIRPERSON :

Second volume being?

ADV MAHLAPE SELLO:
10

CHAIRPERSON :

O f B B 4 ( b ) , t h a n k y o u C h a ir.

Ye s B B 4 ( b ) w h a t d i v i d e r ?

A D V M A H LA P E S E L L O :

I invited him to Annexure 82 at page 637 to

c h e c k w h e th e r th a t ’s t h e a p p r o v a l – t h e Mi n is te r i a l a p p r o v a l h e w a s
seeking.
MR FRANCIS QUEN TIN CALLARD:

Ye s p a g e 6 3 7 o f t h e B u n d le t h e

a p p r o v a l is g iv e n i n t h e l a s t p a r a g r a p h o n t h a t p a g e .
A D V M A H LA P E S E L L O :

A m I m is r e a d i n g t h e d o c u m e n t o r is t h e

d o c u m e n t s il e n t o n t h e a c t u a l p r ic e ?
MR FRANCIS QU ENTIN CALLARD:

I a ls o r e a d t h a t th e d o c u m e n t is

s il e n t o n t h e a c t u a l a m o u n t .
20

ADV MAHLAPE SELLO:

O k a y a n d fo ll o w i n g o n w h a t – th e

d is c u s s io n y o u j u s t h a d w it h t h e C h a ir, t h e a p p r o v a l t o b e s o u g h t b y
Tr a n s n e t w o u l d b e w h e r e th e c o s ts e x c e e d th e B o a r d ’s t h r e s h o l d .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Correct.

S o w e c a n a s s u m e fr o m t h a t l e t te r t h a t –

t h e a p p r o v a l w a s s o u g h t p r e c is e ly b e c a u s e i t e x c e e d e d t h e th r e s h o l d ?

Page 94 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Correct.

To y o u r k n o w l e d g e a n d e x p e r i e n c e w h a t is

t h e p r o p e r a p p r o a c h , d o e s t h e M in is t e r a p p r o v e t h e a c t u a l E T C o r j u s t
a p p r o v e s t h a t th e B o a r d m a y e x c e e d t h e s t ip u l a t e d t h r e s h o l d , w h a t
n o r m a l ly h a p p e n s ?
MR FRANCIS QUENTIN CALLARD:

I c a n ’ t t a l k w i t h a u t h o r i ty o n

w h a t h a d p r e v i o u s l y h a p p e n e d i n te r ms o f o t h e r a p p r o v a l l e t te r s fr o m
t h e M i n i s t e r, I c a n ’ t t a lk .
ADV MAHLAPE SELLO:
10

O k a y i f y o u ’v e g o t n o k n o w le d g e o r

e x p e r i e n c e o n t h a t w e w il l p r o b a b ly g e t a n a n s w e r s o m e w h e r e e l s e .
CHAIRPERSON :

B u t i n r e g a r d t o t h i s p a r t ic u l a r o n e th a t s h o u ld b e

g a t h e r e d fr o m t h e r e q u e s t t o t h e M i n is t e r if w e ’v e g o t it r e a d w i t h th e
r e s p o n s e is n ’ t i t ?
ADV MAHLAPE SELLO:

T h a t w e w il l l o c a te in t h e M N S r e p o r ts i t’s

n o t p a r t o f Mr C a l la r d ’s p a p e r s .
CHAIRPERSON :

O k a y.

MR FRANCIS QUENTIN CALLARD:

Correct though I have seen it, I

d i d n o t in c l u d e i t h e r e b e c a u s e i t w a s n o t t h e p o in t I w i s h e d t o m a k e in
t h is o n e b u t t h e d o c u m e n t is a v a i la b l e .
20

CHAIRPERSON :

O k a y.

ADV MAHLAPE SELLO:

Ye s C h a ir. O k a y t h e n M r C a ll a r d w e m o v e

o n to th e – y o u r n e x t t o p i c o n th e 1 0 6 4 a n d t h a t s ta r t s o n p a g e 2 8 a n d
is t h e a c c e l e r a t e d l o c o m o tiv e d e liv e r y, ( i n d is ti n c t ) t o y o u r p a r a g r a p h
11 6 .
MR FRANCIS QUENTIN CALLARD:

T h a n k y o u , a s b a c k g r o u n d to

Page 95 of 247

20 MAY 2019 – DAY 96
t h is th e b u s in e s s c a s e p o s i te d a d e liv e r y o v e r s e v e n y e a r s e n d i n g in
2 0 1 8 /2 0 1 9 . I t is k n o w n t h a t , t h a t d e l iv e r y w a s – th e c o n tr a c t e d d e l iv e r y
w a s f o r a fa r f a s t e r r a t e o f d e l iv e r y o f lo c o m o ti v e s . I f I m a y t a k e y o u
t h r o u g h t o p a r a g r a p h 11 6 , t h is a c c e le r a t e d l o c o m o tiv e d e li v e r y w h ic h
w a s th e a c c e le r a t e d d e liv e r y c o n tr a c t e d f o r t h e 1 0 6 4 lo c o m o t iv e s d id
n o t , in m y o p i n i o n , m a k e o p e r a ti o n a l o r c o m m e r c ia l s e n s e a n d i t w a s , i n
m y o p in i o n , il l - c o n s i d e r e d a s i t w a s c o n tr a r y t o th e o p e r a t io n a l a d v i c e
w e p r o v i d e d fr o m T F R , i t w a s b e y o n d Tr a n s n e t E n g i n e e r i n g ’s s c o p e t o
d e li v e r th is a c c e l e r a t e d d e li v e r y a n d i t w a s c o n tr a r y to t h e p r o c u r e m e n t
10

s tr a t e g y o f th e b u s i n e s s c a s e .
ADV MAHLAPE SELLO:

Ye s , j u s t t o p l a c e t h i n g s in c o n t e x t a

d e li v e r y w a s s c h e d u l e d t o b e o v e r a 7 y e a r p e r i o d , t h e a c c e l e r a t e d
d e li v e r y r e d u c e d t h a t d e l iv e r y p e r i o d fr o m 7 t o ?
MR FRANCIS QUENTIN CALLARD:

7 t o s o m e 3 to 4 y e a r s I w o n ’ t

t a lk to th e r a t e b u t i t w a s a t a r a te o f 4 8 0 lo c o s p e r y e a r t h a t w a s – w e
w i ll c o m e t o 3 0 0 t o 4 8 0 lo c o s p e r y e a r w h e r e a s t h e b u s i n e s s c a s e , a n d
I w i ll t a lk t o th a t p o s i t e d d e l iv e r y, if I c a n r e m e m b e r c o r r e c t ly o f 2 3 0
lo c o m o t iv e s p e r y e a r.
ADV MAHLAPE SELLO:
20

O k a y.

M R F R A N C I S Q U E N T I N C A L LA R D :

The – if I may just go back to –

f o r a m o m e n t p le a s e to p a r a g r a p h 11 5 , j u s t t o p l a c e i n c o n te x t t h a t I
used

th e

Tr a n s n e t

Board

approved

v e r s io n

w it h

a ll

the

is s u e s

b e f o r e h a n d is – I u s e i t a s a p o i n t o f r e f e r e n c e a n d t h is is A n n e x u r e 5 4
in t h e c a s e a n d I w il l r e f e r t o i t ju s t a s t h e f in a l b u s in e s s c a s e o f t h e
1 0 6 4 b u s i n e s s p la n , i t i s – w h e n I m a k e r e f e r e n c e t o i t a n d t h a t is w h a t

Page 96 of 247

20 MAY 2019 – DAY 96
I w il l b e d o in g i n f u t u r e .
ADV MAHLAPE SELLO:

O k a y.

M R F R A N C I S Q U E N T I N C A L LA R D :

I s a y t h a t a s i n tr o d u c t io n to

p a r a g r a p h 11 7 b e c a u s e t h e 1 0 6 4 b u s in e s s p l a n , w h ic h w e ’ v e ju s t
r e fe r r e d t o , A n n e x u r e 5 4 d i s c u s s e s d e l iv e r y a n d t h e k e y p o i n t o f t h a t
d e li v e r y a r e th a t t h e d e l iv e r y w a s t o b e p o s i t e d o r is p o s i t e d o v e r 7
y e a r s e n d in g 2 0 1 8 /2 0 1 9 a t a m a x i m u m r a te o f 2 3 0 l o c o m o ti v e s p e r
m o n th ,

page

48

of

that

b u s in e s s

plan,

that

would

be

on

p a g e … ( i n te r v e n ti o n ) .
10

ADV MAHLAPE SELL O : 449 perhaps?
M R F R A N C I S Q U E N T I N C A L L A R D : 4 4 9 c o r – a n d t h a t is o n p a g e 4 4 9
p a r a g r a p h 7 .2 o f 4 4 9 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D :

T h e – th is o n p a g e – s o r r y t h a t

w a s 4 4 8 w h e r e w e p o s i t e d t h e d e l iv e r y – n o 4 4 9 .

P l a n n in g a n d

d e li v e r y. 4 4 8 p a g e 4 8 .
A D V M A H L A P E S E L L O : I t h i n k y o u r p a g e r e f e r e n c e is s t il l n o t c o r r e c t .
W e w i ll fi n d t h e c o r r e c t p a g e f o r y o u .
M R F R A N C I S Q U E N T I N C A L L A R D : M y p a g e r e fe r e n c e is n o t c o r r e c t I
20

a p o lo g i s e .
A D V M A H LA P E S E L L O :

W e w i ll fi n d t h e c o r r e c t o n e b u t le t u s

c o n ti n u e w i t h …
M R F R A N C I S Q U E N T I N C A L LA R D : R i g h t .
A D V M A H LA P E S E L L O :

W i t h t h e e s s e n c e o f y o u r t e s ti m o n y in th is

regard.

Page 97 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L L A R D : P a g e 4 4 9 h o w e v e r o f m y r e fe r e n c e
f o r p a r a g r a p h 11 7 .2 d e liv e r y r is k s a n d w h e t h e r th e p o s it iv e t i m e fr a m e s
a r e a c h ie v a b le is c l e a r ly s e t o u t i n 4 4 9 a n d t h a t c o m e s u n d e r p a r a g r a p h
7 .2 p l a n n i n g , d e li v e r y a n d r is k .
A D V M A H L A P E S E L L O : Ye s .
MR

FR A N C I S

QUENTIN

CALLARD:

And

then

h ig h li g h t in g

the

s ig n if ic a n t l o c o m o t iv e s h o r t fa ll t h a t Fr e ig h t R a il w o u l d e x p e r ie n c e
a g a in s t t h e b u s i n e s s p l a n a n d a s s u m p ti o n s a n d th e a s s o c i a t e d lo s s o f
t o n n e s a n d r e v e n u e a r e a ls o s e t o u t th e r e u n d e r t h e d e li v e r y s c h e d u l e
10

s e n s i t iv it y w e h i g h li g h t t h o s e is s u e s .
A D V M A H L A P E S E L L O : Ye s .
M R FR A N C I S Q U E N T I N C A L L A R D :

Th a t is r e a lly b a c k g r o u n d th o u g h

t o w h a t h a p p e n e d la t e r i n e a r ly F e b r u a r y 2 0 1 4 p a r a g r a p h 11 8 w h e n w a s
r e q u e s t e d b y Mr S in g h w h a t w o u ld b e o u r r e s p o n s e t o a n a g g r e s s iv e
d e li v e r y s c h e d u le f o r th e 1 0 6 4 l o c o m o tiv e s ?
ADV MAHLAPE SELLO: Hm.
MR FRANCIS QUENTIN CALLARD:

M e s s r s Pi ll a y, R o p e r a n d I a n d

w i t h o th e r t e c h n i c a l in p u t w e p r e p a r e d a r e p o r t ti tl e d T F R p r e li m i n a r y
v ie w o n e x p e d i ti n g 1 0 6 4 l o c o m o ti v e s .
20

T h is m a y b e f o u n d o n p a g e 2 1

Annexure 56.
ADV MAHLAPE SELLO:

A n n e x u r e 5 6 i s – s ta r t s f r o m 5 2 0 I d o n o t

understand your 21?
M R F R A N C I S Q U E N T I N C A L LA R D : It is 5 2 0 .
ADV MAHLAPE SELL O : 520.
M R F R A N C I S Q U E N T I N C A L LA R D : 5 2 1 .

Page 98 of 247

20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : Ye s . A n d w h il e w e d o t h a t c o u ld y o u q u ic k ly
in d i c a t e w h o s e P il la y – i s t h a t a M s P ill a y ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s M r Pr a g a s e n P il la y.
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CALLARD:

I f – in th e d o c u m e n ta t io n h e w il l

o ft e n b e a b b r e v ia t e d a s J D .
ADV MAHLAPE SELL O : JD. And Roper?
M R F R A N C I S Q U E N T I N C A L L A R D : Th a t i s M s R i ta R o p e r w h o w a s t h e
g e n e r a l m a n a g e r C a p it a l p r o g r a m m e .
10

A D V M A H L A P E S E L L O : Th a n k y o u . Yo u m a y p r o c e e d .
MR FRANCIS QUENTIN CALLARD :

Yo u w i ll s e e th a t w e a r e – th e

n a m e s a p p e a r a t t h e b o t t o m – o n t h e b o t to m o f p a g e 5 2 1 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : A s s ig n a t o r ie s t o th is r e p o r t .
A D V M A H L A P E S E L L O : Ye s .
MR

FRANCIS

QUENTIN

CALLARD:

C o m p i le r s

of

th is

report.

E s s e n t ia ll y w e w e r e a s k e d t o a d d r e s s w h a t w o u l d b e o u r v i e w o n t h e
a c c e l e r a t e d d e l iv e r y o f 3 0 0 l o c o m o ti v e s p e r y e a r ?

W i th o u t g o in g

t h r o u g h t h e d e ta il s o f th e r e p o r t w h ic h i s q u i t e e x p e n s i v e – e x te n s iv e .
20

A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

Ex t e n s iv e I w o u l d h i g h li g h t t h e

p e r t i n e n t c o m m e n ts w h ic h w e r e . As a s tr a te g y w e w o u ld h a v e t o f a s t
p a r k o ld lo c o m o t iv e s w i t h a c a v e a t o n t h e o r g a n is a ti o n a l r e c o g n it i o n o f
t h e t e c h n i c a l n a t u r e o f th is w o r k .

P a r k in g a n d l o c o m o ti v e is n o t

p a r k i n g i t i n a n u n d e r g r o u n d p a r k in g g a r a g e a n d l e a v in g i t fo r a c o u p l e

Page 99 of 247

20 MAY 2019 – DAY 96
of years.

T h e r e a r e a c t io n s w h ic h h a v e t o b e p e r f o r m e d t o p a r k a

lo c o m o t iv e t o e n s u r e t h a t a f t e r s ix m o n th s ’ ti m e o r a y e a r s ’ ti m e i t i s
e i t h e r u s a b le f o r s e r v i c e o r i f o n e is n o t g o i n g t o u s e it f o r s e r v ic e i n
t h e f u tu r e w h a t o n e d o e s w i th t h a t l o c o m o ti v e ?

I t is n o t j u s t

a b a n d o n i n g a lo c o m o t iv e . W e n e e d e d t o e n s u r e a n d I a m o n – r e a d – I
a m b a c k o n p a g e – o n p a r a g r a p h 11 8 .2 m y p a r a g r a p h p a g e 2 9 .

We

n e e d e d t o e n s u r e t h a t t h e m a r k e t w a s t h e r e t o s u p p o r t th e a d d i t io n a l
t o n n a g e s g iv e n t h a t t h e o r i g i n a l b u s i n e s s c a s e r a m p u p w a s t h e r e t o –
w a s l a r g e ly m a t c h e d t o th e t o n n a g e i f w e w e r e a c c e le r a t e d t h e
10

lo c o m o t iv e s w a s t h e m a r k e t a v a il a b l e ? C o u l d w e a d j u s t t h e w a g o n p la n
accordingly?

I n 11 8 . 4 t h e li n k a g e t o m a jo r p r o j e c ts .

Several major

p r o j e c ts w e r e a ff e c t e d h e r e a n d i t w o u ld h a v e to b e a n a d ju s t m e n t i n
t h e c a p it a l c a s h fl o w to f a s t tr a c k c e r t a i n p r o j e c ts t o a c h i e v e t h e
a g g r e s s iv e to n n a g e s p e r t h e t i m e li n e s s t ip u l a t e d .

A n d th a t w o u l d

p a r t ic u l a r ly a d d r e s s c u s t o m e r s , li n e s to t h o s e c u s to m e r s , l o a d i n g a n d
o ffl o a d in g c a p a b i li t ie s .

I t is n o t ju s t b r in g m o r e l o c o m o tiv e s i t h a s to

b e m a t c h e d t o t h e m a r k e t , t o t h e w a g o n s , t o th e t o ta l i n fr a s tr u c t u r e
component.

A n d t h o s e m a j o r p r o j e c t s w o u l d h a v e t o b e a c c e le r a t e d .

T h e d e liv e r y a n d w e m a k e – m a d e q u it e a p o i n t th a t o u r T – t h e
20

Tr a n s n e t E n g i n e e r in g ’s d e li v e r y p r o mi s e f o r a n a g g r e s s i v e s t a r t - u p w a s
A p r il 2 0 1 5 m a y b e – f o r a n a g g r e s s iv e s t a r t - u p t h a t i s to s ta r t
p r o d u c t io n .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD :

I t w a s Fr e i g h t R a il ’s v ie w t h i s

c o u l d b e b e t w e e n th r e e m o n t h s t o o v e r a y e a r l a t e r d e p e n d i n g o n

Page 100 of 247

20 MAY 2019 – DAY 96
w h e t h e r i t w a s d i e s e l o r e l e c tr i c l o c o m o tiv e s a n d a k n o w n o r a n
u n k n o w n s u p p li e r. I m a k e t h e p o in t t h e r e t h a t w h e n o n e is s e t ti n g u p a
p r o d u c t io n l i n e f o r a s u p p l i e r w i th w h o m o n e is f a m il ia r a l o t o f g r o u n d
is a lr e a d y c o v e r e d . I f it is a n u n k n o w n s u p p l i e r i t i s a l o t m o r e
c o m p lic a t e d .

Th e c r it ic a l p o i n t w a s t h a t T E s ta r t - u p o f t h e l o c a l

m a n u f a c t u r e r o f p r e v i o u s c o n tr a c ts h a d n o t b e e n v is i b ly m a n a g e d a s a
p r o j e c t a n d u n d e r a d e d ic a t e d a n d a c c o u n t a b l e p r o g r a m m e m a n a g e r
a c c o r d i n g t o a [ i n d is ti n c t ] v is i b le a n d a c o m m u n ic a te d p r o j e c t p la n .
T h i s w a s t h e c a u s e o f t h e d e la y s e x p e r i e n c e d a n d w e h a v e h ig h l i g h t e d
10

t h o s e a n d t h e d e l a y s a s s o c ia t e d w i t h t h e 9 5 l o c o m o t iv e s . A n d i n e ff e c t
t h is

was

building

on

those

delays

w h ic h

we

knew

about.

C o m m i s s i o n i n g . I t c o m m is s i o n i n g a l o c o m o tiv e o n e r e q u ir e s s t a ff w i th
c e r t a i n e x p e r t is e a n d t h e a b i li ty t o c o m m i s s io n a n d w e d o n o t h a v e t h a t
m a n y s t a ff t h a t c o u ld d e a l w i t h t h a t m a n y l o c o m o ti v e s c o m in g in i n s u c h
a short period of time.

T h e r e w a s i n s u ffi c i e n t s k i ll e d s t a ff .

o p e r a ti o n s w e d i d n o t h a v e s u ffic i e n t tr a i n d r iv e r s .
t w o t o t h r e e y e a r s t o t r a in a tr a i n d r iv e r.

In

I t ta k e s b e t w e e n

T h e y ju s t w e r e n o t r e a d il y

a v a i la b le t o d e a l w i t h t h is n u m b e r o f lo c o m o t iv e s a n d w e w o u ld n e e d to
r e v ie w o u r c r e w r e q u i r e m e n ts w it h a n a g g r e s s iv e i n t a k e i n th e 2 0 1 4 / 1 5
20

fi n a n c i a l

y e a r.

The

maintenance

interventions

of

lo c o m o t iv e s w o u l d h a v e to b e a d j u s t e d a n d o r c u r ta il e d .

the

current

W e a ls o p u t

f o r w a r d t h e c o n tr o l o f lo c o m o t iv e s b e m o v e d t o lo g is tic s i n t e g r a ti o n t o
c o n s o l id a t e to c o n tr o l i n tr o d u c e p r o a c tiv e p l a n n in g t e c h m o n it o r in g a n d
d e v e l o p a n e n f o r c e d k e y p e r f o r m a n c e in d i c a t o r s .

A n d la s tly w e

h i g h l ig h te d a l l th e r is k s i n t h e b u s i n e s s p l a n a r o u n d t h is r a p id d e l iv e r y

Page 101 of 247

20 MAY 2019 – DAY 96
o f lo c o m o t iv e s . L o n g s to r y s h o r t w e s e n t t h is r e p o r t t o M r G a m a , S i n g h
a n d M s R o p e r o n th e 1 2 F e b r u a r y 2 0 1 4 .
ADV MAHLAPE SELLO:

A n d t h e g i s t o f t h a t m e m o r a n d u m is

a c c e l e r a ti o n is n o t a d v is a b le ?
MR FRANCIS QUENTIN CALLARD :

A s o u n d r e a d i n g w o u ld s a y tr e a d

v e r y c a r e f u l ly b e f o r e a c c e l e r a t i n g t h e s e lo c o m o t iv e s .
A D V M A H L A P E S E L L O : Th a n k y o u . Yo u m a y c o n ti n u e .
M R F R A N C I S Q U E N T I N C A L L A R D : P e r h a p s tr e a d c a r e f u l ly i s n o t t h e
r ig h t p h r a s e b u t w e h ig h l i g h t e d th e r is k s a s w e c o u l d to w a r n o ff th is
10

a c c e l e r a t e d d e li v e r y.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : I p e r h a p s s u m m a r is e d t h i s b e s t o n
the 26 February and I am ready paragraph 120.
“ W h e n r e s p o n d i n g to M r S i n g h o n v a r io u s s c e n a r i o s I
e x p l ic i t ly s ta t e d t h i s w a s i n a n e m a il t h a t w e Fr e i g h t
R a il c o u ld n o t a b s o r b m o r e t h a n 3 0 0 lo c o m o t iv e s p e r
year

due

to

m a r k e ti n g

and

c o m m is s i o n i n g

c o n s tr a i n ts .”
A n d t h a t is in A n n e x u r e 5 7 w h i c h is o n p a g e 5 3 4 .
20

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : M a y I ju s t t a k e fr o m t h e r e ? T h e r e
w e r e th r e e s c e n a r io s .

4 0 l o c o m o tiv e s p e r m o n t h v e r s u s t h e o r i g i n a l

p l a n . 4 8 l o c o m o tiv e s p e r m o n t h v e r s u s t h e 3 0 0 p e r y e a r a n d 3 0 0 p e r
y e a r v e r s u s t h e o r i g in a l . A ls o f a c t o r e d i n d e l iv e r y to p r o d u c ti o n . Th e
la s t p o i n t .

Page 102 of 247

20 MAY 2019 – DAY 96
“ Pl e a s e n o t e N B w e c a n n o t a b s o r b m o r e t h a n th e 3 0 0 p e r y e a r d u e t o
m a r k e t a n d c o m m i s s io n i n g c o n s tr a i n t s p e r t h e e a r l ie r n o te .”
A D V M A H LA P E S E L L O :

A n d th e a c c e l e r a ti o n w o u l d h a v e in c r e a s e d

t h a t , th e n u m b e r o f l o c o m o ti v e s f o r y o u t o a b s o r b fr o m 3 0 0 t o ?
M R F R A N C I S Q U E N T I N C A L L A R D : T h is w a s a r o u n d th e – p o te n ti a l ly
around the 300 mark.
ADV MAHLAPE SELLO:

A n d t h a t w a s s ti ll a b o v e w h a t th e b u s in e s s

p l a n h a d o r ig i n a ll y p la n n e d ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s . I w e n t – g o b a c k t o th e p o i n t
10

t h a t t h e b u s i n e s s p l a n h a d p o s i t e d p e r p a r a g r a p h 11 7 .1 a m a x i m u m r a t e
o f 2 3 0 lo c o m o tiv e s p e r m o n t h .
A D V M A H L A P E S E L L O : O k a y. P l e a s e c o n ti n u e .
MR FRANCIS QUENTIN CALLARD:

Fr o m p a r a g r a p h 1 2 2 t h e a b o v e

n o t w i t h s t a n d in g P il l a y a n d I w e r e r e q u e s t e d t o p r e s e n t a v i e w u p d a t e d
f o r a g g r e s s i v e d e liv e r y o f 4 8 0 p e a k p e r y e a r.
report.

W e d i d – r e d id th is

I t f o ll o w e d t h e s a m e f o r m a t a s t h e p r e v i o u s r e p o r t b u t it w a s

m o r e d e t a i l e d in t h e l in k s to m a j o r p r o j e c ts . M o s t o f t h e p r o j e c ts h a d t o
b e c o m p l e t e d w i t h i n t w o y e a r s w i th a c a v e a t t h a t n o t a l l t h e p r o j e c ts
w e r e f u l ly f u n d e d . T h is a d d e d e m p h a s is t o t h e r is k s a n d d e l iv e r y a n d
20

c o m m i s s io n i n g s e c t io n s .

I f I m a y j u s t o u tl in e t h a t ?

R e c o g n is i n g t h a t

in c r e a s i n g th e r a t e o f l o c o m o tiv e s to 4 8 0 p e r m o n th w o u l d r e q u i r e
a d d it i o n a l c a s h fl o w.

W e w e r e a lr e a d y w e ll a w a r e o f t h e c o n s tr a in t

b u d g e t s a n d th e b u d g e t li m i t a ti o n s . S o m o v i n g m o n e y to p r o c u r i n g th e
lo c o m o t iv e s w o u ld t a k e c a p i t a l a w a y fr o m t h e c a p i t a l p r o j e c ts w h i c h
w e r e r e q u ir e d t o s u p p o r t t h e l o c o m o tiv e s p a r tic u la r ly i n te r m s o f t h e

Page 103 of 247

20 MAY 2019 – DAY 96
in fr a s tr u c t u r e a n d t h e li k e .
A D V M A H LA P E S E L L O :

Just perhaps you might – I should find out

fr o m y o u . W h e n y o u a n d b y y o u I m e a n p l u r a l y o u th e t e a m w a s
r e q u e s t e d to c o n s i d e r a c c e le r a t in g d e l i v e r y w h a t w a s t h e r e a s o n
a d v a n c e d fo r t h e n e e d fo r a c c e l e r a t i o n ? If o n e e v e r w a s .
M R F R A N C I S Q U E N T I N C A L LA R D :

W e w e r e g iv e n a r e a s o n p o s t

event.
A D V M A H L A P E S E L L O : A t t h e t i m e i t w a s n o t s t a te d w h a t – w h y t h e y
n e e d t o a c c e le r a t e – a r e a s o n ?
10

M R F R A N C I S Q U E N T I N C A L L A R D : I h a v e n o th in g i n w r i ti n g a s t o w h y
w e n e e d e d t o a c c e l e r a te .
ADV MAHLAPE SELLO:

B u t to – th e p e r s o n w h o r e q u e s t e d y o u

c o n s i d e r a c c e l e r a ti o n w h e t h e r i n w r i ti n g o r v e r b a ll y w a s a r e a s o n g iv e n
you?
M R F R A N C I S Q U E N T I N C A L LA R D : T h e n a t u r e o f t h e r e a s o n g i v e n t o
u s w a s t h a t a c c e le r a t in g th e l o c o m o ti v e s w o u l d s a v e f o r e x c o s t s i n t o
the future.
ADV MAHLAPE SELLO:

O k a y.

And w as it demonstrated how that

could be achieved?
20

MR FRANCIS QUENTIN CALLARD:

I t w a s le f t a t a s t a te m e n t i t w a s

n o t d e m o n s tr a t e d h o w i t c o u ld b e a c h ie v e d .
A D V M A H L A P E S E L L O : Th a n k y o u . Yo u m a y p r o c e e d .
M R F R A N C I S Q U E N T I N C A L LA R D :

Not that I am aware of.

So we

p r e p a r e d t h i s r e p o r t a n d I a m a t t h e b o tt o m o f p a r a g r a p h 1 2 2 a n d w e
s e n t i t t o M r G a m a f o r i n p u t o n th e 6 M a r c h f o r o n w a r d tr a n s m is s io n t o

Page 104 of 247

20 MAY 2019 – DAY 96
M r Si n g h .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

Per paragraph 23 Mr Gama

r e s p o n d e d o n t h e 1 0 M a r c h 2 0 1 4 p l e a s e t h a t is a c o r r e c ti o n t h e r e ,
a l lo c a t in g s p e c i fi c r e s p o n s i b i li ti e s to v a r i o u s p r o j e c t s . W e o u tl in e d a l l
t h e w o r k w h ic h h a d t o b e d o n e a n d h e a l l o c a t e d r e s p o n s i b i li t ie s to
t h o s e p r o j e c t s . H e s t r e s s e d t h a t w e h a d u n d e r e m p h a s is e d th e Tr a n s n e t
E n g i n e e r i n g a n d s h o u ld u p d a t e t h e r e p o r t b e f o r e s e n d in g i t to t h e
G r o u p C h i e f Fi n a n c i a l O ffi c e r.
10

ADV MAHLAPE SELLO: Hm.
M R F R A N C I S Q U E N T I N C A L L A R D : W e u p d a t e d th e r e p o r t a n d o n t h e
11 M a r c h I s e n t i t t o in t e r a li a M r G a m a a n d M r Si n g h w i t h a c o v e r in g
n o t e t h a t th e v e r y a g g r e s s i v e d e liv e r y p o s e s a n o v e r a ll r i s k a s i t
r e q u ir e s v e r y ti g h t s i m u l t a n e o u s c o o r d in a ti o n o f m a r k e ts , c u s to m e r
c a p a c i ty,

material

s u p p ly,

developing

in fr a s tr u c t u r e

c a p a c i ty

and

w a g o n s . A n d th is i s A n n e x u r e 5 8 p a g e 5 3 6 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

T h a t is t h e – th e d e t a i l o f t h e

r e p o r t a n d w i t h o u t d w e ll in g o n th e r e p o r t i n d e t a i l j u s t o n p a g e 5 3 6 t h e
20

in d e x d e t a i ls th e i t e m s w h i c h w e c o v e r i n d e ta il .
ADV MAHLAPE SELLO : And before you leave that point you introduce
t h r o u g h y o u r s u p p l e m e n t a r y a ff id a v i t – s t a te m e n t a t p a r a g r a p h 1 0
t h e r e o f p a g e 3 A n n e x u r e 5 8 . – 5 8 A a n d y o u s a y i t is a n e m a i l d a t e d 11
M a r c h 2 0 1 4 fr o m y o u r s e l f to S iy a b o n g a G a m a a n d A n o j S in g h . T h is i s
t h e c o v e r in g n o t e r e f e r r e d to in p a r a g r a p h 1 2 4 o f m y s t a te m e n t .

Page 105 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : S o t h a t e m a i l i s t h e c o v e r i n g n o te t o w h e n y o u
s e n t t h e d o c u m e n t w h i c h is A n n e x u r e 5 8 ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Th a n k y o u .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Ye s y o u m a y p r o c e e d .
MR FRANCIS QUENTIN CALLARD :

T h e u p s h o t o f t h is r e p o r t w a s a n

e x t e n s iv e w o r k s h o p o n t h e 2 7 M a y 2 0 1 4 a n d a n a l lo c a t io n a n d
10

d e a ll o c a ti o n o f ta s k s a n d r e s p o n s i b il it i e s t o a d d r e s s t h e d e fa c to
s i tu a ti o n .

I s ta t e d e f a c t o s i tu a ti o n b e c a u s e n o w o n t h e 2 7 M a y

c o n tr a c ts h a d a lr e a d y b e e n s i g n e d a n d a c c e l e r a te d d e li v e r y w a s n o w a u
fait accompli.
A D V M A H L A P E S E L L O : S o th e – w e k n o w fr o m r e c o r d s th a t th e 1 0 6 4
c o n tr a c t w a s s ig n e d o n t h e 1 7 M a r c h 2 0 1 4 ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

O n w h i c h t i m e li n e w e r e t h e c o n t r a c t s s i g n e d

t o y o u r k n o w l e d g e ? Wa s i t o n a n a c c e l e r a ti o n b a s is o r o n t h e o r i g i n a l
seven year?
20

M R F R A N C I S Q U E N T I N C A L LA R D : N o i t w a s o n th e a c c e l e r a t e d b a s i s .
A D V M A H L A P E S E L L O : S o t h a t w a s a c o n tr a c te d p o s i ti o n a lr e a d y ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : T h e …
ADV MAHLAPE SELL O : And then therefore – sorry at 125 you hold the

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20 MAY 2019 – DAY 96
w o r k s h o p t h a t i s w h a t y o u m e a n – y o u h o l d th e w o r k s h o p a ft e r t h e
c o n tr a c t is c o n c lu d e d a n d t h e r e f o r e ?
MR FRANCIS QUENTIN CALLARD:

T h e c o n tr a c t h a d b e e n c o n c l u d e d

w e h a v e t h is d e li v e r y s ta r i n g u s n o w i n t h e f a c e , h o w a r e w e g o i n g t o
d e a l w it h it ?

W e h o ld t h i s w o r k s h o p t o a d d r e s s th e d e f a c t o s i t u a t io n

h o w w e a r e g o in g to m a n a g e t h e s e lo c o m o ti v e s ?
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : A n d A n n e x u r e 5 9 o n p a g e 5 5 4 .
A D V M A H L A P E S E L L O : Ye s .
10

M R F R A N C I S Q U E N T I N C A L L A R D : Is m y e m a i l t o m u l t ip le c o ll e a g u e s
a d d r e s s i n g a m e e ti n g w e h a d o n th e 2 7 M a y a n d if I t u r n t o p a g e – i f w e
m a y t u r n t o p a g e 5 5 5 p le a s e w i th o u t g o i n g t h r o u g h th e d e t a i l . I t s e t s
out what we have to do and the variety of tasks that have to be
p e r f o r m e d a n d th e i n d i v i d u a ls a s s ig n e d t o t h o s e t a s k s to a d d r e s s t h e
s i tu a ti o n .
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CALLARD:

I t a k e i t fu r t h e r th a t b y J u ly t h e

2 0 1 4 s t r a t e g y a n d b u s i n e s s p la n n i n g h a d t a k e n o v e r c o o r d in a ti n g a l l
t h e r e s p o n s e s a n d a c ti o n s e m a n a t in g fr o m t h i s 2 7 M a y w o r k s h o p .
20

L o o s e ly t h e y u s e d th e f r a m e w o r k o f th e r e p o r t . S tr a t e g y a n d b u s in e s s
p l a n n in g p r e c e d e d t o u s e t h e r e s p o n s e s a n d a c t io n s a s t h e b a s i s o f th e
fir s t i te r a ti o n f o r th e 2 0 1 5 / 1 6 b u s in e s s p la n a n d t h a t i s i n d ic a te d i n
Annexure 60 page 558.
A D V M A H L A P E S E L L O : O k a y. A n d w e a c c e p t a n n e x u r e i s t h e r e .
MR FRANCIS QUENTIN CALLARD:

T h e a n n e x u r e is t h e r e a n d i t is

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20 MAY 2019 – DAY 96
fr o m s tr a t e g y a n d p a g e 5 5 9 s a y s i t is f r o m t h e s t r a t e g y a n d b u s in e s s
p l a n n in g a n d i t p r a c ti c a ll y m i r r o r s w h e r e w e w e r e .
A D V M A H LA P E S E L L O : Ye s . S o – a n d w h a t h a p p e n e d to th is r e p o r t
a ft e r it w a s c o n c l u d e d ?
M R F R A N C I S Q U E N T IN C A L L A R D :

Well on the – I go to the –

p a r a g r a p h 1 2 7 th a t o n th e 1 0 J u l y s tr a te g y a n d b u s i n e s s p l a n n i n g h a d
s h a r e d a n d I h a v e a d d r e s s e d t h a t i n m y s u p p le m e n t a r y w e a r e r e a d y t o
s h a r e t h a t i s in fa c t h a d s h a r e d a p r e s e n t a ti o n o n t h e a c c e l e r a t e d
lo c o m o t iv e d e l iv e r y p l a n w i th M r G a m a p e r A n n e x u r e 6 1 .
10

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : W h e r e th e y s a y t h e y h a d s h a r e d i t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L LA R D : O n t h e 1 6 J u ly f o r t h e p r e s e n t a t io n
b y s tr a te g y a n d b u s i n e s s p l a n n i n g t o th e Tr a n s n e t G r o u p E X C O I s e n t
t h e f o l lo w i n g c o n c l u d i n g s l id e .
A D V M A H L A P E S E L L O : Ye s .
M R FR A N C I S Q U E N T I N C A L L A R D : T h is p r e s e n t a ti o n to M r G a m a w a s
u p d a te d w i th m in o r a m e n d m e n ts b u t I s e n t t h e f o l lo w in g c o n c l u d i n g
s li d e .

20

T h e r e w a s a n a d d i t io n b y M r P il la y t h a t d id n o t m a k e it t o t h e

s li d e b u t I w o u l d li k e t o q u o t e t h a t .
“ I n o r d e r to e n s u r e t h e r e i s a r e l i a b le s y s t e m i t is r e q u ir e d t h a t r a i l
n e t w o r k m a k e s t h e r e q u ir e d i n v e s t m e n t in l in e w i t h h o w th e l o c o m o ti v e s
a r e d e p l o y e d in t o th e T F R s y s te m .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : D i d n o t m a k e i t t o th e p a c k .

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : S o t h e r e p o r t d r a w s c e r t a i n c o n c lu s i o n s a n d
m a k e s r e c o m m e n d a ti o n s ?
M R F R A N C I S Q U E N T I N C A L L A R D : R ig h t . T h e c o n c l u d in g s l i d e to th is
p a c k th a t I d r a f t e d w a s c o n c l u s io n . B e t w e e n th e th r e e s c e n a r i o s t h e r e
w a s n o s i g n i fi c a n t fi n a n c i a l d i ffe r e n c e b e tw e e n t h e th r e e s c e n a r i o s .
T h e t h r e e s c e n a r i o s g e a r i n g a n d d e b t i n te r e s t b r e a c h G o v e r n a n c e i n a ll
cases.

T h e p r o s p e c t o f d e l a y s in l o c o m o tiv e d e li v e r y h a s n o t b e e n

addressed however real.

Vo lu m e s fo r t h e a c c e l e r a te d d e li v e r y o f 4 8 0

lo c o m o t iv e s p e r a n n u m a r e a t r is k .
10

C a p it a l a n d O P E X t h a t is

O p e r a t io n a l E x p e n d i t u r e r e la t e d t o th e 1 0 6 4 a n d 1 6 0 lo c o m o t iv e s c a n
b e p h a s e d b u t n o t n e g a te d .
ADV MAHLAPE SELLO: Hm.
MR FRANCIS QUENTIN CALLARD :

I a d d e d t h e r e c o m m e n d a ti o n th a t

t h e lo c o m o t iv e d e l iv e r y b e r e p h r a s e d – b e r e p h r a s e d t o b e t w e e n 2 5 0
a n d 3 0 0 lo c o m o t iv e s p e r a n n u m w i th 4 0 0 b e i n g t h e u p p e r li m i t .

The

s h a r e h o l d e r a n d t r e a s u r y b e a p p r o a c h e d t o a p p r o v e t h e s h o r t te r m
b r e a c h i n c a s h , i n te r e s t , c o v e r a n d g e a r i n g .

T h e c o n c lu d i n g s l i d e t o

t h a t p r e s e n t a ti o n .
A D V M A H L A P E S E L L O : A n d t h e s e r e c o m m e n d a t io n s w e r e s h a r e d w i t h
20

Mr Gama then?
M R F R A N C I S Q U E N T I N C A L L A R D : I c a n n o t s a y th a t t h e y w e r e s h a r e d
w i t h M r G a m a b u t t h e y m a d e t h e ir w a y i n to th e fi n a l r e p o r t i n t o th e
p r e s e n t a ti o n .
A D V M A H L A P E S E L L O : Th e p r e s e n t a ti o n w a s m a d e t o w h o m ?
MR FRANCIS QUENTIN CALLARD:

T h e p r e s e n t a ti o n I b e l ie v e w a s

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20 MAY 2019 – DAY 96
t h e n m a d e t o E X C O I s a y I b e l ie v e I g a v e i t t o s tr a t e g y a n d b u s i n e s s
p l a n n in g . T h e y t o o k i t f o r w a r d . I c a n n o t s a y h o w th e y t o o k i t fo r w a r d .
A D V M A H L A P E S E L L O : A n d w h o in p a r t ic u l a r i n s tr a t e g y a n d b u s i n e s s
p l a n n in g ?
MR FRANCIS QUENTIN CALLARD:

W e ll t h e e x e c u t iv e m a n a g e r i n

s tr a t e g y a n d b u s i n e s s p l a n n i n g a t th a t m o m e n t – a t th a t ti m e w a s M s
Sandra Gertenbach.
ADV MAHLAPE SELLO: Ms?
M R F R A N C I S Q U E N T I N C A L L A R D : S a n d r a G e r t e n b a c h h e r d e t a ils a r e
10

per 61 I take you to Annexure 61.
CHAIRPERSON : Here is 61 the annexure.
MR FRANCIS QUENTIN CALLARD :

Page 562.

S h e w a s E x e c u ti v e

M a n a g e r i n t h e o ff ic e o f t h e C h ie f E n g i n e e r, C h ie f Ex e c u ti v e S tr a te g y
a n d b u s i n e s s p l a n n in g .
A D V M A H LA P E S E L L O :

O k a y.

N o w a s w e [i n d i s t i n c t ] t h e tw o

r e c o m m e n d a ti o n s y o u m a k e d o y o u k n o w w h e th e r t h e r e - p h a s i n g y o u
r e c o m m e n d w a s c a r r i e d o u t?
M R F R A N C I S Q U E N T I N C A L L A R D : N o . N o t h e r e - p h a s i n g – th e r e w a s
no re-phasing.
20

ADV MAHLAPE SELLO:

S o t h e e x p e c t a ti o n w a s s t il l t o d e li v e r – t o

t a k e d e l iv e r y o f 4 8 0 l o c o m o tiv e s p e r a n n u m ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s c o r r e c t a n d in f a c t th a t ti e s
in w i t h my p a r a g r a p h – w i t h p a r a g r a p h 1 2 9 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L LA R D : T h e p r e s s u r e s o n t h e a c c e le r a t e d

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20 MAY 2019 – DAY 96
d e li v e r y p r o g r a m m e w e r e i n te n s e .
ADV MAHLAPE SELLO: Hm.
M R F R A N C I S Q U E N T I N C A L L A R D : O n th e 3 0 O c t o b e r 2 0 1 4 I r e c e iv e d
t h e f o l lo w i n g s m s f r o m M r G a m a . I d o n o t q u o t e :
“ I d o n o t c h a n g e m y m in d d a ily. Yo u a n d J D a g r e e d t o 4 8 0 m a x a f e w
m o n th s a g o m a k e i t w o r k . ”
I d o n o t r e c a ll th e e x a c t c ir c u m s t a n c e s t h a t g a v e r i s e t o th e s m s b u t i t
w a s s y m p to m a t ic o f t h e p r e s s u r e a t t h e ti m e . I t is p o s s i b l e a n d I s tr e s s
it is p o s s i b l e t h a t i t w a s r e l a te d to t h e r e c o m m e n d a ti o n s a b o v e .
10

A D V M A H L A P E S E L L O : N o w t h a t s m s i n d ic a t e s t h a t y o u a n d J D a n d I
t a k e i t t h a t is M r Pi ll a y a s y o u i n d ic a t e d ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

H a d p r e v io u s ly a g r e e d t h a t y o u c a n a b s o r b

4 8 0 m a x a fe w m o n th s a g o , d i d y o u e v e r ?
MR FRANCIS QUENTIN CALLARD:

T h a t w o u l d b e a r e a d in g o f t h e

s ms .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:
m o n th s a g o .
20

We did not agree to 480 a few

A l a b e c a u s e t h a t w o u ld b e in d ir e c t c o n tr a d i c t i o n to m y

e m a i l t o M r S i n g h w h ic h I r e f e r r e d t o w h e r e I s a id w e c a n n o t a b s o r b
m o r e th a n 3 0 0 p e r m o n th .
A D V M A H L A P E S E L L O : A n d w h ic h is – y o u r e f e r r e d u s t o e a r li e r a s
Annexure – at 534.
M R F R A N C I S Q U E N T I N C A L LA R D : A t .
ADV MAHLAPE SELL O : At page 534.

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : A s A n n e x u r e 5 3 4 .
A D V M A H LA P E S E L L O :

A n d y o u r p o s i ti o n h a s a l w a y s b e e n t h a t y o u

can – you can absorb maximum up to 300?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : S o y o u – y o u r p o s i ti o n is t h a t y o u n e v e r m a d e
t h a t a g r e e m e n t w i th M r G a m a ?
M R F R A N C I S Q U E N T I N C A L LA R D : W e d i d n o t m a k e t h a t a g r e e m e n t .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L L A R D : Th e – a n d t h e f a c t t h a t w e m a y –
10

w e p r e p a r e d a r e p o r t o n th e a g g r e s s iv e d e li v e r y h i g h l ig h ti n g a ll t h e
r is k s a n d a c ti o n s t o b e ta k e n i f w e w e r e t o g o t o 4 8 0 d i d n o t s a y t h a t
w e a g r e e d w i t h 4 8 0 . I t p o i n t e d o u t e x t e n s iv e o r g a n is a ti o n a l r i s k s a n d
i m p a c ts . W e s a id i f y o u w a n t t o d o th is t h is i s w h a t h a s t o h a p p e n b u t
w e d i d n o t a g r e e to i t.
A D V M A H L A P E S E L L O : O k a y.
C H A I R P E R S O N : S o i n o th e r w o r d s y o u m a d e y o u r p o s i t io n q u i te c l e a r
b u t t o th e e x t e n t t h a t y o u m a y h a v e b e e n u n d e r in s t r u c ti o n t o d o w h a t
s o m e b o d y h ig h e r u p y o u k n o w t h o u g h t s h o u l d b e d o n e y o u w o u l d p la y
y o u r r o l e a s l o n g a s y o u r p o s it i o n w a s k n o w n ?

20

M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s t h e w a y i t w o r k s .
A D V M A H L A P E S E L L O : J a . O k a y.
A D V M A H L A P E S E L L O : T h a n k y o u C h a ir. M r C a ll a r d fr o m p a r a g r a p h
1 3 0 y o u th e n m o v e t o a s l ig h tl y d i ff e r e n t t o p ic . Tr a n s n e t E n g in e e r i n g
preparedness.
MR FRANCIS QUENTIN CALLARD:

Correct.

Page 112 of 247

T h i s is a – a n o th e r

20 MAY 2019 – DAY 96
m a t t e r o n t h is o n e a s to w h y – y e s . Fr o m o n e p a r a g r a p h 1 3 0 Tr a n s n e t
E n g i n e e r i n g w a s I b e li e v e il l e q u ip p e d t o h a n d l e t h e a c c e le r a t e d
lo c o m o t iv e d e liv e r y. I n F e b r u a r y 2 0 1 4 M r P il l a y a n d I a c c o m p a n i e d M r
S i n g h a n d o th e r s t o m e e ti n g s w i t h P r ic e W a te r h o u s e C o o p e r r e f e r r e d t o
h e r e i n t h e d o c u m e n ts a s P W C t o d i s c u s s Tr a n s n e t E n g i n e e r in g ’s
p r e p a r e d n e s s t o m a n u f a c t u r e /a s s e m b l e l o c o m o t iv e s .

I t is m y c o r r e c t

r e c o l l e c ti o n th a t w e f u ll a p p r a is e d t h e m o f o u r c o n c e r n s b a s e d o n
Tr a n s n e t E n g in e e r i n g ’s l a te d e l iv e r y o f t h e 9 5 2 0 E lo c o m o t iv e s .

Th e

ti m e it to o k t o g e t th e G E th a t is th e G e n e r a l El e c t r ic a s s e m b ly li n e u p
10

a n d r u n n in g th is w a s f o r t h e d i e s e l l o c o m o t iv e s a n d i n o u r v ie w t h e
s tr u c t u r a l a n d c u lt u r a l d e fic ie n c i e s i n Tr a n s n e t E n g i n e e r i n g t o r a p i d ly
tr a n s fo r m i n t o a w o r l d c la s s m a n u f a c t u r i n g a n d a s s e m b ly fa c i li ty. P W C
h a d p r e p a r e d – o r p r e p a r e d a r e p o r t th a t is e x t e n s iv e a n d d e ta il e d . I t
h i g h l i g h ts s ig n if ic a n t r is k s i n T E ’s c a p a b il i t y.
ADV MAHLAPE SELLO:

Before you go past that point.

T h e r e is

s o m e t h i n g y o u n e e d to p o i n t o u t t o t h e C h a ir o n t h i s p a r a g r a p h 1 3 2 t h a t
is s ig n if ic a n t a n d i n p a r ti c u la r I a m r e f e r r i n g t o w h a t y o u s ta t e in y o u r
s u p p l e m e n t a r y s t a t e m e n t a t p a r a g r a p h 11 o f y o u r s u p p le m e n t a r y
s t a te m e n t M r C a l l a r d .
20

M R F R A N C I S Q U E N T I N C A L L A R D : Ye s . P a r a g r a p h – I r e f e r t h e r e i n
p a r a g r a p h 1 3 2 t o A n n e x u r e 6 2 A . I t is b u t o n e s li d e s e t ti n g o u t th e r is k
o f a t te m p t i n g t o c o m p r e s s t h e d e l iv e r y s c h e d u le s .
ADV MAHLAPE SELLO:

B e f o r e y o u g e t t h e r e . L e t u s d e a l w it h y o u r

fir s t s t a t e m e n t . Yo u s a y P W C p r e p a r e d a r e p o r t t h a t is e x te n s iv e a n d
detailed.

Page 113 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:
c a p a b il i t y.

I

am

Al s o h ig h l i g h ts s ig n i f ic a n t r is k a n d T E

p o i n ti n g

you

to

your

paragraph

11

in

your

s u p p l e m e n t a r y s t a te m e n t w h e r e y o u s e e k t o i n tr o d u c e a d o c u m e n t
w h ic h i s n o t c u r r e n t ly o r is n o t p a r t o f y o u r o r i g i n a l s t a te m e n t .
MR FRANCIS QUENTIN CALLARD:

C o r r e c t, c o r r e c t.

And that

d o c u m e n t i s o n p a g e 2 1 o f t h e s u p p l e m e n t a r y.
ADV MAHLAPE SELLO:

A n d y o u in d ic a t e a t y o u r p a r a g r a p h 11 t h a t

t h is is th e P W s l id e y o u r e f e r to ?
10

M R F R A N C I S Q U E N T I N C A L LA R D : T h i s i s t h e P W s l i d e I r e fe r t o y e s .
A D V M A H L A P E S E L L O : A n d A n n e x u r e 6 2 A i s n o t t h a t P W s li d e ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : O k a y. S o C h a ir i f y o u c o u l d – t h e C h a i r c o u ld
ju s t s c r i b b l e a t 1 3 2 t h a t t h a t s l i d e th a t M r C a ll a r d r e f e r s to a t 1 3 2 i s
in c l u d e d t h r o u g h h i s s u p p l e m e n ta r y s t a t e m e n t p a r a g r a p h 11 t o b e
m a r k e d 6 2 B . T h a n k y o u C h a ir.
CHAIRPERSON : Thank you.
A D V M A H L A P E S E L L O : Th e n y o u m a y p r o c e e d .
M R F R A N C I S Q U E N T I N C A L L A R D : T h a n k y o u . A n d i f I m a y t h e n ju s t

20

add that Annexure 62A belongs to paragraph 138 because it refers to a
Tr a n s n e t F r e i g h t R a il r is k in t h e r a m p u p .
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CALLARD:

I – c o m e a g a i n t h a t a ll t h e s e

c o n c e r n s o f o n e i n Tr a n s n e t E n g i n e e r in g p r e p a r e d n e s s a r e a l s o
e x p r e s s e d i n t h e r e p o r t s o n th e p r e li m i n a r y v i e w o f e x p e d i ti n g th e 1 0 6 4

Page 114 of 247

20 MAY 2019 – DAY 96
lo c o m o t iv e s a n d w h ic h w a s A n n e x u r e 5 6 a n d t h e r e p o r t u p d a t e d f o r t h e
a g g r e s s iv e d e l iv e r y o f t h e 4 8 0 p e a k p e r y e a r.

W e h i g h l i g h t e d th e s e

r is k s i n t h a t r e p o r t.
A D V M A H L A P E S E L L O : S o d o w e u n d e r s t a n d t h e n fr o m w h a t y o u a r e
s a y in g t h a t y o u h ig h li g h t e d t h e r i s k s p e r ta i n i n g t o Tr a n s n e t E n g i n e e r in g
preparedness

and

PWC

drew

s i mi l a r

c o n c lu s i o n s

th a t

there

is

s ig n if ic a n t r is k …
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELL O: As per Annexure 62B?
10

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

A n d b o th t h e s e w e r e s h a r e d w i th s e n i o r

e x e c u tiv e s w i t h i n Tr a n s n e t ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Th a n k y o u . Yo u m a y p r o c e e d .
M R F R A N C I S Q U E N T I N C A L LA R D :

Right.

In paragraph I mention

t h e r e t h a t t h e d e t a i l e d c o n c e r n s o f a t e c h n ic a l c o l le a g u e a n d h is t e a m
as set out in the email of 6 June 2014.
ADV MAHLAPE SELLO: Ja.
M R F R A N C I S Q U E N T I N C A L LA R D :
20

e m a i ls a n d t h e p h o t o g r a p h s .

W e h a v e a lr e a d y a ll u d e d t o t h o s e

I h i g h l i g h t t h a t th e y g iv e e x p r e s s i o n t o

t h is c o n c e r n .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : I ( i n te r v e n e s ) .
A D V M A H L A P E S E L L O : N o w to y o u r – to y o u r k n o w l e d g e w a s h e r e –
n o – w a s th e r e e v e r – I w i ll r e p o s t th a t . W a s t h r e e e v e r a r e s p o n s e – a

Page 115 of 247

20 MAY 2019 – DAY 96
f o r m a l r e s p o n s e t o y o u r r e p o r t h ig h li g h t i n g th e s e r is k s ?
M R F R A N C I S Q U E N T I N C A L LA R D : N o , n o t t h a t I a m a w a r e o f .
ADV MAHLAPE SELL O: Is it your …
M R F R A N C I S Q U E N T I N C A L LA R D : I h a v e n o tr a c e o f i t .
ADV MAHLAPE SELLO:

I s i t y o u r u n d e r s t a n d in g t h a t a l t h o u g h – th a t

t h e s e r is k s w e r e i n f a c t b r o u g h t t o t h e a t te n ti o n o f th e s e n i o r
e x e c u tiv e s w i t h i n Tr a n s n e t ?
M R F R A N C I S Q U E N T I N C A L LA R D :

T h e r e p o r t s w e r e b r o u g h t t o th e

a tt e n ti o n – b o t h r e p o r t s a n d I h a v e m e n ti o n e d t h a t t h e y w e r e e m a i l e d t o
10

M r G a m a a n d M r S in g h .
report.

The

second

M s R i ta R o p e r w a s a c o c o m p i le r o f t h e fi r s t
report

was

a ls o

s p e c i fi c a lly

addressed

to

M s N o m f u y o G a l e n i w h o w a s th e C h i e f F in a n c i a l O ff ic e r o f Tr a n s n e t
Fr e i g h t R a i l.

S h e – s o r r y w e a r e d e a li n g n o w w i t h t h e A g g r e s s iv e

D e li v e r y R e p o r t?
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

Ye s .

She

undertook

c e r t a in

a c ti o n s a n d c o m p i le d c e r t a i n m e e t in g s w h i c h g a v e r is e t o i t b e i n g t a k e n
in t o s t r a t e g y a n d p l a n n i n g . S h e i n it i a t e d t h o s e fi r s t s e r i e s o f m e e t i n g s
a s a n u p s h o t o f t h e r e p o r t.
20

A D V M A H L A P E S E L L O : Ye s . W e r e th e s e r is k s s h a r e d w i t h t h e B o a r d
at any point? Do you know?
M R F R A N C I S Q U E N T I N C A L LA R D :

I c a n n o t s a y d e fi n i t iv e ly.

Fr o m

what I have read of Board minutes they do not appear to have been. I
c a n n o t s a y d e f in i tiv e ly.
A D V M A H L A P E S E L L O : O k a y. T h a n k y o u . I in t e r r u p t e d y o u w h e n y o u

Page 116 of 247

20 MAY 2019 – DAY 96
w e r e d e a li n g w it h y o u r 1 3 5 . I f y o u m a y ta k e i t u p fr o m t h e r e .
M R F R A N C I S Q U E N T I N C A L LA R D : S u r e . M y 1 3 5 is a c o m m e n t t h a t :
“ I t i s r e g r e t ta b l y c o m m o n c a u s e t h a t m a n y o f t h e
1 0 6 4 lo c o m o t iv e d e l iv e r i e s a r e r u n n i n g l a te .

The

m e d i a r e p o r t f r o m t h e C h a ir m a n o f t h e Tr a n s n e t
B o a r d o n 4 D e c e m b e r 2 0 1 8 r e p o r te d t o P a r l i a m e n t
t h a t o n ly 4 9 7 o f t h e 1 0 6 4 lo c o m o t iv e s h a d b e e n
d e li v e r e d s o f a r.

W h e n i n t e r m s o f t h e d e l iv e r y

s c h e d u l e a l l o f t h e m s h o u l d h a v e b e e n d e l iv e r e d b y
10

n o w.”
A D V M A H L A P E S E L L O : S o b y n o w m e a n in g b y th e d a t e o n w h i c h t h e
C h a ir a p p e a r e d b e fo r e …
M R F R A N C I S Q U E N T I N C A L LA R D : By t h e d a t e o f 4 D e c e m b e r 2 0 1 8 .
ADV MAHLAPE SELLO:

N o w i n a n y g iv e n y e a r w a s t h e t a r g e t o f 4 8 0

lo c o m o t iv e s p e r a n n u m e v e r m e t ?
M R F R A N C I S Q U E N T I N C A L LA R D :

I d i d n o t t r a c k i t s p e c i f ic a l ly b u t I

w o u ld b e e x tr e m e ly s u r p r is e d i f i t w a s e v e r m e t .

I would say with a

h i g h d e g r e e o f c o n fi d e n c e i t w a s n o t m e .
ADV MAHLAPE SELLO:
20

Now in your - to your knowledge and in your

e x p e r i e n c e w h e n th e n t h e d e l iv e r y is a c c e l e r a te d d o e s t h a t h a v e a n y
i m p a c t a n d i f s o w h a t k i n d o f i m p a c t o n th e r a te o f p a y m e n t f o r th e
d e li v e r i e s ?
M R F R A N C I S Q U E N T I N C A L LA R D :

W e ll

a c c e l e r a t e s th e r a te o f p a y m e n t .
A D V M A H L A P E S E L L O : O k a y.

Page 117 of 247

accelerated

d e l iv e r y

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D :

In s o f a r a s w e h a v e s e e n a n d w il l

s e e in a p a r t fr o m t h e d o w n p a y m e n t t h e b a l a n c e o f th e p a y m e n t is t h e n
s p r e a d a c r o s s t h e l o c o m o ti v e s . S o th e h i g h e r t h e r a t e o f d e liv e r y t h e
lo c o m o t iv e s th e g r e a t e r th e c a s h fl o w in a n y p a r tic u la r y e a r.
A D V M A H L A P E S E L L O : Yo u – y o u g e t i n t o y o u r – to t h e n e x t to p ic o f
p r o c u r e m e n t s tr a te g y. I f y o u – y o u d o n o t h a v e t o r e a d t h a t p a r t . I a m
s u r e y o u c a n s u m m a r is e w h a t i s u n d e r t h a t h e a d i n g .
M R F R A N C I S Q U E N T I N C A L LA R D : I – I w o u ld s u m m a r is e 1 3 6 th r o u g h
t o 1 3 9 a s fo ll o w s : t h a t th e b u s in e s s p l a n h i g h l ig h te d t h e n e e d t o a d j u s t
10

t h e r a t e o f d e liv e r y in l i n e w i t h r is k a s i t m a t e r ia li s e d .

R i s k s b e in g

e i t h e r a n a c c e le r a t io n o f t h e m a r k e t o r a s l o w d o w n i n t h e m a r k e t g r o w t h
a n d t h a t w e n e e d e d t o b e a b l e t o a d j u s t t h e l o c o m o tiv e d e l iv e r y
a c c o r d i n g ly.

T h e u p s h o t o f t h e a c c e le r a t e d lo c o m o t iv e d e l iv e r y

c o n tr a c t w a s t h a t i t n e g a te d a l l t h e p r o te c ti o n w e s o u g h t i n t h e
b u s i n e s s c a s e f o r b e i n g a b le t o a d j u s t t h e r a t e o f d e li v e r y o f t h e
lo c o m o t iv e e i t h e r b y e x t e n d i n g i t i f t h e m a r k e t d i d n o t m a t e r ia li s e a s w e
h a v e s e e n o r b y a c c e l e r a ti n g i t s h o u l d t h e m a r k e t h a v e r e a l l y g r o w n
f u r th e r.

T h a t m e c h a n is m w h ic h w e s a w i n th e b u s i n e s s c a s e w a s n o t

t a k e n f o r w a r d a n d i n fa c t e n tir e ly n e g a t e d b y t h e r a p i d a c c e l e r a ti o n
20

p r o c u r e m e n t s tr a t e g y t h a t w a s f o ll o w e d .
A D V M A H L A P E S E L L O : O k a y. T h e n I t h i n k th a t t a k e s u s to a d v a n c e –
t h e i s s u e o f a d v a n c e p a y m e n t s a t – s t a r t in g a t y o u r p a r a g r a p h 1 4 1 .
M R F R A N C I S Q U E N T I N C A L LA R D : J a a n d i t w a s m y …
CHAIRPERSON :

W e ll a t p a r a g r a p h 1 4 0 is t h a t n o t q u i te i m p o r t a n t –

that conclusion?

Page 118 of 247

20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : W e c a n p l a c e i t o n r e c o r d s p le a s e …
CHAIRPERSON: Hm.
ADV MAHLAPE SELLO:

W h a t y o u s t a t e a t 1 4 0 p le a s e c o n s i d e r th a t

and …
M R F R A N C I S Q U E N T I N C A L LA R D :

140 yes.

I t is my c o n c lu s i o n – I

c o n c l u d e t h a t:
“ I t w a s a p i ty t h a t th e w o r s t c a s e v o l u m e s h o r t fa ll
id e n t i fi e d i n t h e b u s i n e s s c a s e i s e x a c t ly w h a t
fr e i g h t r a i l e x p e r ie n c e d t h a t t h e m a r k e t - i n e s s e n c e
10

– t h a t t h e m a r k e t d i d n o t m a t e r i a lis e a s w e r e
d e p o s it e d i n t h e M D S w it h i ts d o u b l in g o f fr e i g h t.
F u r th e r t h i s o c c u r r e d w i th o u t t h e b e n e fi t o f a
fl e x ib l e p r o c u r e m e n t a n d c o n tr a c t in g s t r a t e g y th a t
a l lo w e d l o c o m o tiv e p u r c h a s e r s t o b e a c c e l e r a t e d o r
t h r o t t le d b a c k w i th o u t u n d u e p e n a l ti e s .”
ADV MAHLAPE SELLO:

T h a n k y o u C h a ir.

We turn then to the

q u e s t io n o f a d v a n c e p a y m e n ts a n d y o u d e a l w i t h t h a t fr o m y o u r
paragraph 141.
M R F R A N C I S Q U E N T I N C A L LA R D :
20

Sure.

A g a i n I o p e n t h i s w i th a –

w i t h a c o n c lu s i o n :
“That

it

is

my

considered

o p in io n

that

the

c o n tr a c te d p a y m e n t s c h e d u l e s n e g a tiv e l y a n d n o n n e c e s s a r i ly i m p a c t e d Tr a n s n e t . Th e 1 0 6 4 b u s i n e s s
case

d e p o s it u p fr o n t p a y m e n t s o n s ig n i n g t h e

c o n tr a c ts o f 2 5 0 m i l l i o n f o r t h e d i e s e l a n d 3 5 0

Page 119 of 247

20 MAY 2019 – DAY 96
m il li o n f o r t h e e l e c tr ic lo c o m o t iv e s .”
A n d w e h a v e d e a l t w it h t h a t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : “ T h e s e u p fr o n t p a y m e n t s
w e r e in c o r p o r a te d i n t o t h e f in a n c ia l m o d e ls .

The

t a b le

fr o m

b e lo w

on

144

is

e x tr a c t e d

1 0 D e c e m b e r 2 0 1 3 r e p o r t o f t h e C r o s s F u n c ti o n a l
E v a l u a t io n Te a m .”
That was Annexure 83 …
10

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

A n d i t m a y b e fo u n d o n p a g e 6 5 9

o f t h e b u n d le .
ADV MAHLAPE SELLO:

A n d th a t is w h e r e y o u s a y t h e t a b l e c o m e s

fr o m ?
M R F R A N C I S Q U E N T I N C A L LA R D :

T h a t is w h e r e t h a t t a b l e c o m e s

fr o m .
A D V M A H L A P E S E L L O : B u t fo r t h e m o m e n t y o u c o n fi n e y o u r s e l f t o t h e
c o n te n ts o f t h e t a b l e ( i n t e r v e n e s ) ?
M R F R A N C I S Q U E N T I N C A L LA R D : F o r t h e m o m e n t I c o n f in e m y s e lf t o
20

t h e c o n te n ts o f t h e t a b l e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : T h e c o n t e n t s o f t h e ta b l e – w e w il l
s e e t h a t t h a t d e p o s i ts t h a t b i d d e r o n e w h ic h is B o m b a d ie r h a d a t o ta l
p a y m e n t b e fo r e a c c e p ta n c e o f 2 4 p e r c e n t.
A D V M A H L A P E S E L L O : Ye s .

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : B i d d e r tw o w h ic h w a s C S R o f 1 . 6 2
percent.
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D : B i d d e r t h r e e – a n d I r e c a ll t h a t o n e
o ffh a n d – 2 4 p e r c e n t . B i d d e r f iv e , 1 . 6 2 p e r c e n t, b i d d e r s e v e n w h i c h w a s
M i ts u i w a s 1 . 6 2 p e r c e n t.
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

I n e s s e n c e I u s e t h i s t o il l u s tr a te

t h a t t h e p o s i t io n t a k e n in th e b u s in e s s c a s e o f u p f r o n t p a y m e n ts o f 3 0 0
10

m il li o n fo r e le c t r ic l o c o m o tiv e s w e r e n o t o u t o f l i n e . T h a t t h e y c o u l d b e
e x p e c te d .
C H A I R P E R S O N : In t h a t c o lu m n o r t a b le y o u s a id M i ts u i w a s w h ic h ?
M R F R A N C I S Q U E N T I N C A L LA R D : B id d e r s e v e n .
C H A I R P E R S O N : B id d e r s e v e n .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : O k a y, th a n k y o u .
A D V M A H L A P E S E L L O : S o t h e n l e t u s d e a l w it h b i d d e r tw o – C S R . A s
a t t h e b i d s t a g e C S R h a d o ffe r e d t o a c c e p t a n u p fr o n t p a y m e n t o f 1 . 6 2
of the total price?

20

M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

Th a t w a s a t th e e n d o f t h e

document, yes.
ADV MAHLAPE SELLO:

O k a y.

T h e n w h a t h a p p e n s a f te r t h e s e a r e

received?

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D :

N o w t h a t w a s f o r t h e e le c t r ic

lo c o m o t iv e s .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ta b l e o n e o n p a r a g r a p h 1 4 5 – t h e
f o ll o w i n g ta b l e is t h e s a m e e x tr a c t b u t f r o m t h e d i e s e l lo c o m o t iv e s . I t
m a y b e f o u n d o n p a g e 6 9 9 b u t i t is e x tr a c t e d h e r e .

That bidder one

w h ic h w a s C N R , b i d d e r t w o w h ic h w a s C S R .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :
10

B id d e r th r e e w a s E M D w h ic h I –

E l e c tr o M o t iv e D iv is io n …
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D : S h o r t f o r E M – a b b r e v ia t e d t o E M D
a n d b i d d e r f o u r w a s G e n e r a l El e c tr ic – G E .
ADV MAHLAPE SELLO: Ja.
M R F R A N C I S Q U E N T I N C A L LA R D :
percent.

W e w i ll s e e t h a t C N R w a s 1 .0 8

C S R – 1 . 4 3 p e r c e n t , b i d d e r t h r e e w a s a s k i n g fo r 2 5 p e r c e n t

and bidder four – 10 percent.
A D V M A H L A P E S E L L O : O k a y. S o i n s o fa r a s C N R a n d C S R – a t l e a s t
– a r e c o n c e r n e d th e y w e r e – t h e y b o th p r o p o s e d p a y m e n t o f – b e lo w 2
20

percent.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

A n d I m a k e t h e p o i n t o n p e r 1 .4 6

t h a t t h e a b o v e t a b l e s h o w e d t h e d e p o s i t o r A P G p a y m e n ts i n th e o r d e r
o f o n e t o 2 p e r c e n t o n ( i n d is t in c t ) .

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : S o - a n d w h a t in r e a l it y t h e n h a p p e n e d ?
M R F R A N C I S Q U E N T I N C A L LA R D : I n r e a li ty w h a t h a p p e n e d t h e t a b l e
b e l o w is c o m p i l e d fr o m A n n e x u r e 1 7 . N o w A n n e x u r e 1 7 w a s a – a fi le
w h ic h I r e c e i v e d fr o m – m a y I j u s t t u r n to A n n e x u r e 1 7 . T h i s – o n p a g e
2 7 5 . Th e f il e w a s – i t w a s a s p r e a d s h e e t o f c o p i e s o f c a s h f lo w f in a ls
on 17 March when the …
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

P a y m e n t s w e r e fi n a l ly c o n tr a c t e d .

I g iv e e x tr a c ts o f t h a t a n d th is t a b l e is c o m p i le d fr o m th a t s p r e a d s h e e t .
10

ADV MAHLAPE SELLO:

O k a y.

W o r k u s t h r o u g h th e t a b le s o w e

understand please.
M R F R A N C I S Q U E N T I N C A L LA R D :

T h e e s s e n c e o f th is i s t h a t t h i s

was the payment guarantees and payments to be made over the nature
o f t h e c o n tr a c t .

I f I m a k e t a k e u s t o B o m b a d i e r.

We had a payment

n o w o f 9 p e r c e n t , a d e s i g n r e v i e w o f 9 p e r c e n t a n d a p a y m e n t a ft e r 6
m o n th s o f 8 p e r c e n t g i v i n g a t o t a l a d v a n c e p a y m e n t b e f o r e a n d I s tr e s s
t h a t th is is b e f o r e a l o c o m o t iv e is d e l iv e r e d o f 2 7 p e r c e n t . Th is i s a n
in c r e a s e o f 3 p e r c e n t fr o m w h a t th e y p u t f o r w a r d in t h e ir o r i g in a l b id
d o c u m e n t r e fe r r i n g t o th e ta b le o n p a g e …
20

ADV MAHLAPE SELLO: 34.
M R F R A N C I S Q U E N T I N C A L LA R D : 3 4 .
A D V M A H L A P E S E L L O : Th e y h a d o r ig in a l ly p r o p o s e d 2 4 p e r c e n t.
M R F R A N C I S Q U E N T I N C A L LA R D : A n d it w e n t u p to 2 7 p e r c e n t.
A D V M A H L A P E S E L L O : A n d th e i r c o n tr a c t e d p o s i t io n i s 2 7 p e r c e n t ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .

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20 MAY 2019 – DAY 96
ADV MAHLAPE SELL O: Or would …
CHAIRPERSON : Does …?
A D V M A H L A P E S E L L O : B e c o n tr a c t e d p o s i ti o n .
CHAIRPERSON :

D o e s th e t a b l e a t 3 5 r e m in d w h o t h e o t h e r b id d e r s

w e r e t h a t y o u c o u l d n o t r e m e m b e r e a r l i e r o r n o t r e a l ly ?
M R F R A N C I S Q U E N T I N C A L LA R D : W e ll t a b l e 3 5 w a s t h e – t a b l e 3 5 t h e fir s t o n e w a s B o m b a d i e r – b id d e r o n e w a s B o m b a d i e r. B i d d e r t w o
was CSR.
CHAIRPERSON : Huh-uh.
10

M R F R A N C I S Q U E N T I N C A L LA R D :

B i d d e r s e v e n w a s M i ts u i a n d t h e

d e t a i l is h e r e – b i d d e r s t h r e e a n d fiv e w e r e b e t w e e n Si e m e n s a n d
A ls t o m . I w ill r e f l e c t th a t in a m o m e n t . B i d d e r t h r e e w a s A ls t o m a n d
b i d d e r f iv e w a s S i e m e n s .
CHAIRPERSON : Thank you.
A D V M A H L A P E S E L L O : Ye s . N o w y o u – y o u h a d j u s t t a k e n u s t h r o u g h
B o m b a d i e r.
M R F R A N C I S Q U E N T I N C A L LA R D :
you.

I h a d t a k e n u s th r o u g h – t h a n k

I f w e l o o k a t C S R t h e t o t a l a d v a n c e p a y m e n t is n o w 3 0 p e r c e n t

b e f o r e d e l iv e r y o f a lo c o m o t iv e w h e r e a s in th e b id d o c u m e n ts it w a s
20

1 .6 2 p e r c e n t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : F o r G e n e r a l E l e c tr ic i t r e m a in s th e
s a m e 1 0 p e r c e n t t o 1 0 p e r c e n t c o m p a r i n g t h e t a b l e a t t h e to p o f p a g e
3 5 w i t h t h e t a b l e o n – a g a in s t o n e – p a r a g r a p h 1 4 7 1 0 p e r c e n t r e m a i n s
10 percent. For CNR whereas in the bid documents it was 1.08 percent

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20 MAY 2019 – DAY 96
it n o w in c r e a s e s a f te r t h e n e g o t ia t io n a t a w a r d s t a g e t o 1 5 p e r c e n t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : I a m i g n o r in g th e C S R 1 0 0 a n d t h e
G E 6 0 . T h e y a r e n o t p a r t o f th e 1 0 6 4 . T h e y w e r e j u s t – I m a k e th e
p o i n t t h e n o n p a r a g r a p h ( i n te r v e n e s ) .
ADV MAHLAPE SELLO:

S o r r y, p l e a s e e x p l a i n w h y y o u a r e e x p l o r in g

t h e o th e r s .
M R F R A N C I S Q U E N T I N C A L LA R D :

W e h a v e a lr e a d y d e a l t w i th t h e

CSR 100 …
10

A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : L o c o m o t iv e s …
A D V M A H L A P E S E L L O : A n d t h a t is w h a t th e fi n a l tw o c o l u m n s r e la t e
to?
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s w h a t th e f in a l tw o c o lu m n s
relate to.
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELL O: Please proceed.
M R F R A N C I S Q U E N T I N C A L LA R D : Th e c o n c l u s io n I m a k e fr o m t h is i s

20

p a r a g r a p h 1 4 8 b u t fr o m t h e a b o v e t a b l e t h e a d v a n c e d p a y m e n ts b e f o r e
a lo c o m o t iv e is d e l iv e r e d f o r th r e e b i d d e r s i n c r e a s e d fr o m t h e ir i n i t ia ls
b i d s . Th is w a s a s l i g h t i n c r e a s e fr o m a h i g h b a s e a n d C S R h a v in g th e
highest

increase

by

CNR.

I

have

deleted

s u p p l e m e n t a r y. I h a v e c h a n g e d …
ADV MAHLAPE SELLO: And …

Page 125 of 247

th e

words

in

my

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : I f y o u lo o k f o r t h r e e b i d d e r s a n d I
h a v e d e l e te d G E r e m a i n e d th e s a m e .
A D V M A H L A P E S E L L O : N o w w h a t w e h a v e a t th a t t a b le a t p a r a g r a p h
1 4 7 th is w a s th e p o s i ti o n p o s t n e g o ti a ti o n o r … ?
M R F R A N C I S Q U E N T I N C A L LA R D :

This

is

the

post

negotiation

p o s i ti o n a n d I m a k e t h e p o i n t in p a r a g r a p h 1 4 9 . T h e i n c r e a s e s b e g t h e
q u e s t io n a s to h o w t h e f in a l n e g o ti a ti o n s w e r e c o n d u c te d .
ADV MAHLAPE SELLO:

So

we

have

no

understanding

of

how

n o t w i t h s t a n d in g t h e f a c t th a t C S R o ff e r s t o a c c e p t 1 .6 2 p e r c e n t o f t h e
10

fi n a l p r i c e in a d v a n c e p a y m e n t h o w th a t j u m p e d t o 3 0 . D o w e h a v e a n –
a n y u n d e r s ta n d i n g o f h o w th a t c a m e a b o u t ?
M R F R A N C I S Q U E N T I N C A L LA R D : N o .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : O th e r s m a y h a v e ( i n t e r v e n e s ) .
ADV MAHLAPE SELL O: No, no you.
M R F R A N C I S Q U E N T I N C A L LA R D : I d o n o t.
A D V M A H L A P E S E L L O : Th a n k y o u . Yo u m a y t h e n c o n ti n u e o v e r l e a f .
M R F R A N C I S Q U E N T I N C A L LA R D :

I h a v e a lr e a d y d e a l t w i t h i t e m 5 0

a n d th e …
20

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :
as

previously

G E u p fr o n t p a y m e n ts .

mentioned a consequence

Under 151

of the agreed

advance

p a y m e n t s w a s th a t o n c o n tr a c t i n it i a t i o n o f 1 7 M a r c h 2 0 1 4 Tr a n s n e t h a d
t o p a y a n u p fr o n t a d v a n c e p a y m e n t o f 7 .3 7 b i ll io n b e fo r e 1 A p r il 2 0 1 4 .
T h i s w a s s o t h a t t h e p a y m e n ts w o u ld b e r e f le c te d i n t h e 2 0 1 3 / 2 0 1 4

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20 MAY 2019 – DAY 96
fi n a n c i a l y e a r.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

One of the consequences of the

p a y m e n t s c h e d u l e w a s t h a t Tr a n s n e t h a d to i n c r e a s e i ts f o r e ig n
b o r r o w in g s .
ADV MAHLAPE SELLO: Hm.
M R F R A N C I S Q U E N T I N C A L LA R D :

And I refer you here please to

Annexure 63 and 64 and these are on pages 569 to 573. 569 – if I may
g iv e i t i n c o n t e x t – h i g h l ig h ts a s e r ie s o f e m a ils t h a t I – b e t w e e n m y s e l f
10

a n d o t h e r i n d iv i d u a l s w h i c h ju s t s a y t h a t t h e G r o u p h a d t o a p p ly t o t h e
D e p a r t m e n t o f P u b l ic E n t e r p r i s e f o r a n i n c r e a s e i n t h e f o ll o w i n g fu n d i n g
li m i t . C o u l d I p l e a s e a s s i s t w i t h m y i n t e r p r e ta t io n o f … ?
A D V M A H L A P E S E L L O : Yo u r - i f I m a y j u s t s a y – y o u r 5 6 9 y o u h a v e
t a k e n u s to A n n e x u r e 6 3 .
M R F R A N C I S Q U E N T I N C A L LA R D : 5 6 9 A n n e x u r e 6 3 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

A n d I a m r e a d in g fr o m t h e m i d d l e

o f t h e e m a il . I a d d r e s s i t t o v a r i o u s p a r t ie s a n d I s a y :
“ H i a l l , G r o u p h a v e a p p li e d t o D P E f o r a n i n c r e a s e
20

in th e fo ll o w i n g f u n d in g l i m it . T h e y h a v e c o m e b a c k
w i t h a d d i ti o n a l q u e s t io n s a n d t h e y r e l a te a r o u n d t o
t h e 1 0 6 4 a n d t h e l ik e . ”
T h e p o i n t w h ic h I w a n t t o m a k e is t h a t t h e s l id e s w h i c h – t h e w o r k
w h ic h I r e t u r n e d t o th e – t o G r o u p a r o u n d th is i t c a n b e f o u n d o n p a g e
574 and 575.

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : Th a t i s y o u r A n n e x u r e 6 4 ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s A n n e x u r e 6 4 .
ADV MAHLAPE SELL O: We are at 575.
M R F R A N C I S Q U E N T I N C A L LA R D : M a y w e j u s t d o 5 7 4 a t th e m o m e n t
please?
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

Th e fir s t o n e a n d y o u w i ll s e e

t h e r e u n d e r t o ta l w h e r e t h e r e q u ir e d f u n d i n g f o r th e 2 0 1 4 / 2 0 1 5
c o r p o r a t e p l a n is g iv e n a t R 1 5 . 1 b il li o n a s r e q u ir e d f u n d in g .
10

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : I a m n o t a d d r e s s i n g t h e s o u r c e o f
t h e f u n d i n g h o w i t i s m a d e u p . J u s t th e q u a n t u m .
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D : If w e m a y t u r n o v e r p le a s e a n d th is
s li d e a d d r e s s e s r e v is e d f u n d in g r e q u i r e m e n ts a n d t h e l e ft h a n d c o l u m n
is t h e b u d g e t f o r 2 0 1 4 / 2 0 1 5 R a n d m il li o n a n d i t t a l k s t o a f u n d in g
r e q u ir e m e n t o f 1 5 . 0 7 3 . I t i s n o r m a l t h a t o n e h a s a r o u n d i n g a n d t h a t …
ADV MAHLAPE SELL O: Of course.
M R F R A N C I S Q U E N T I N C A L LA R D : 1 5 . 1 t o 1 5 .0 7 3 .

20

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

W h a t th e y t h e n d o i s t h e y d e d u c t

t h e fo r e ig n fu n d i n g r e q u ir e m e n t o c c a s i o n e d b y t h e 1 0 6 4 l o c o m o ti v e s
o n t h e i n i ti a l c a s h f lo w s w e h a d p u t fo r w a r d .

T h e y t h e n a d d b a c k to

t h a t t h e c u r r e n t lo c o m o t iv e s c a s h fl o w s o c c a s i o n e d b y th e a c c e l e r a t e d
d e li v e r y.

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20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D :

W e w i ll s e e th a t th e fu n d i n g

r e q u ir e m e n t i n c r e a s e s b y s ix – a f ig u r e t o t h e o r d e r o f R 6 b il li o n i n t h e
2 0 1 t /2 0 1 5 f in a n c ia l y e a r.
ADV MAHLAPE SELLO:
achieve

by

d e d u c ti n g

H u h - u h a n d – a n d t h a t 6 b i ll io n w e – w e
fr o m

the

t o ta l

of

21

b i ll i o n

the

f u n d in g

r e q u ir e m e n t in t h e t h ir d l i n e o f y o u r t a b l e ? T h a t is th e a d ju s t m e n t ?
M R F R A N C I S Q U E N T I N C A L LA R D :

May I go back?

I t is p e r h a p s

s li g h t ly d i ff e r e n t ly.
10

A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

W e h a v e t h e fu n d i n g r e q u ir e m e n t

o f 1 5 b il li o n . T h a t is t h e t h ir d l i n e le f t h a n d c o l u m n .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

W e r e m o v e th e c a s h fl o w a s

o c c a s i o n e d b y t h e 1 0 6 4 a g a i n s t t h e e a r l ie s t …
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D :

Cash

fl o w s

w h ic h

drops

th e

f u n d i n g r e q u i r e m e n t to 1 3 . 7 5 5 b il li o n .
A D V M A H L A P E S E L L O : Ye s .
20

M R F R A N C I S Q U E N T I N C A L LA R D :

W e t h e n a d d b a c k t h e f u n d in g

r e q u ir e m e n t o f th e r e v is e d c a s h fl o w s g i v e n t h e a c c e l e r a te d d e l iv e r y
a n d i f w e a d d t h o s e f ig u r e s o f b e i n g 4 8 2 4 1 2 2 6 1 3 2 0 …
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D :

If we add that back to the 13.755

w h ic h is t h e f u n d i n g r e q u i r e m e n t o f 2 1 . 1 2 5 b il li o n . C o m p a r i n g t h a t w i t h

Page 129 of 247

20 MAY 2019 – DAY 96
t h e in i ti a l 1 5 b i ll i o n g i v e s u s t h e i n c r e a s e o f 6 b i lli o n …
A D V M A H L A P E S E L L O : Th a n k y o u .
M R F R A N C I S Q U E N T I N C A L LA R D :

Because

of

th e

increased

a c c e l e r a t e d d e li v e r y i n c r e a s e d f u n d i n g r e q u ir e m e n t o f t h e o r g a n is a t i o n .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : A s w e w o r k t h r o u g h t h e r e m a i n i n g
c o l u m n s w e w i ll s e e t h e r e a r e a ls o s ig n i fi c a n t in c r e a s e s i n f u n d i n g
r e q u ir e m e n t s b a s e d o n th e s e c a s h f l o w s .
A D V M A H L A P E S E L L O : Th a n k y o u .
10

M R F R A N C I S Q U E N T I N C A L LA R D : I d o q u a li fy t h a t w h il e m y r e s p o n s e
m i g h t n o t h a v e b e e n d e f in i ti v e b e c a u s e lik e a n y s e t th i n g s m a y h a v e t o
b e t w e a k e d I w a s n o t t h e fi n a l a r b i te r b u t I b e li e v e th is i ll u s tr a t e s th e
q u a n tu m o f t h e in c r e a s e s t h a t w e r e i n e ff e c t .
A D V M A H L A P E S E L L O : Yo u – w e t h e n t u r n to t h e e v a lu a ti o n p r o c e s s
…
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : O f t h e 1 0 6 4 l o c o m o t iv e s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

20

W h ic h y o u d e a l w i th f r o m – f r o m y o u r

paragraph 153?
M R F R A N C I S Q E N T I N C A L L A R D : Ye s .
ADV MAHLAPE SELLO:

A n d y o u s u g g e s t t h a t y o u a r e g o in g t o d e a l

w i t h t h is i n tw o p h a s e s ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

T h e f ir s t b e i n g t h e b id p r o c e s s – t h e r e c e i p t

Page 130 of 247

20 MAY 2019 – DAY 96
o f t h e b id s u p to a n d in c l u d i n g s e le c t i n g t h e f i n a l s u p p l i e r s ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

O k a y.

T h e s e c o n d p h a s e d e a ls w i t h t h e

n e g o ti a ti o n s w i th s e le c te d s u p p li e r s ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

O k a y.

L e t u s t u r n f ir s t t h e n t o y o u r fi r s t

p h a s e w h ic h y o u b e g i n t o ta lk to fr o m y o u r p a r a g r a p h 1 5 4 a t p a g e 3 7 ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:
10

Ye s .

Yo u e x p r e s s a v i e w a t 1 5 4 t h a t y o u

b e li e v e th a t th e p r o c e s s …
M R F R A N C I S Q U E N T I N C A L LA R D : I q u o t e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

“ I b e l ie v e th a t t h e 1 0 6 4

e v a l u a t i o n p r o c e s s w a s f la w e d .
t h a n a d m in is tr a ti v e ly f l a w e d .

It – it was more

I t w a s fl a w e d .

The

M N S R e p o r t in t o t h e 1 0 6 4 L o c o m o ti v e s Vo l u m e 1 –
14 August 2018

in

the

E x e c u t iv e

Summary

c o n c l u d e s t h a t t h e r e s u l ts o f a l l o f t h e a b o v e
(except
20

th e

p r ic e

increases)

renders

he

p r o c u r e m e n t o f t h e 1 0 6 4 lo c o m o t iv e s t h e s u b j e c t
s u s c e p ti b le to j u d i c i a l r e v i e w f o r fa il u r e t o a d h e r e
t o t h e a p p l ic a b le le g a l fr a m e w o r k .”
ADV MAHLAPE SELLO: I see.
M R F R A N C I S Q U E N T I N C A L LA R D :

I

w i ll

complement

the

above

fi n d i n g w i t h d e t a i l n o t c o v e r e d i n t h e M N S R e p o r t . I w i ll d r a w – in th is

Page 131 of 247

20 MAY 2019 – DAY 96
s e c t io n I w il l d r a w o n m a t e r ia l t o w h ic h I h a v e h a d a c c e s s t h r o u g h m y
w o r k w i th M N S a n d m a t e r ia l m a d e a v a i l a b l e t h r o u g h t h e Z o n d o
C o m m i s s i o n a n d d o c u m e n t s i n t h e p u b l ic d o m a i n .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : I w i ll c o v e r t h e fo ll o w i n g t o s u p p o r t
m y c o n t in g e n c e t h a t t h e e v a l u a ti o n p r o c e s s w a s f l a w e d .

I again I

d e l e t e th e w o r d “ a d m in is tr a ti v e ly ” .
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D :

“ T h e f ir s t i s p r e s c r i b i n g

t h e r o le o f T E a s a s u b c o n tr a c t o r w h e n it is n o t

10

s u p p o r t e d b y d o c u m e n ta t io n .

S e c o n d ly, u s i n g t h e

p r e s c r i p t i o n o f T E a s a m e c h a n is m t o a d j u s t t h e
price

for

a p p ly i n g

e v a l u a ti o n .
th e

T h ir d ly,

p r e s c r i p ti o n

of

i n c o n s i s te n tl y

TE

–

Tr a n s n e t

E n g i n e e r i n g – a c r o s s t h e b i d d e r s a n d f i n a ll y i t is
m o r e a s a c o n c l u s io n t h a n a c o n t e n t i o n b u t a s a
consequence of the above the BAFO – Best And
Fi n a l

O ff e r

-

p r ic e s

to

the

1 064

L o c o m o ti v e

S t e e r i n g C o m m i t t e e w e r e n o t a r e f le c t i o n o f t h e r e a l
c o s t .”

20

A D V M A H L A P E S E L L O : Yo u s t a t e h e r e it is n o t a tr u e r e f le c ti o n o f t h e
real cost?
M R F R A N C I S Q U E N T I N C A L LA R D :

W e r e n o t a t r u e r e fl e c t io n o f t h e

real cost.
ADV MAHLAPE SELLO:

O k a y.

Then you provide – you give us a

Page 132 of 247

20 MAY 2019 – DAY 96
sense by way of background and context at 157 and paragraph 158 the
– t h e t i m e li n e t h a t is r e l e v a n t t o th is a s p e c t o f y o u r te s ti m o n y a n d t h e
d o c u m e n ts y o u w i ll b e r e l y i n g o n ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

M ay

I

just

for

ease

of

u n d e r s t a n d in g …
A D V M A H L A P E S E L L O : A b s o lu t e l y.
M R F R A N C I S Q U E N T I N C A L LA R D :
10

J u s t h i g h l ig h t t h e ti m e li n e s t h e r e

b e c a u s e t h e y p la c e t h i n g s i n c o n t e x t .
A D V M A H L A P E S E L L O : A b s o lu t e l y.
M R F R A N C I S Q U E N T I N C A L LA R D :

O n 1 6 J u ly 2 0 1 2 th e R e q u e s t F o r

P r o p o s a l P a r t 1 w a s is s u e d . Th is w a s p r i m a r il y te c h n i c a l o f n a t u r e . O n
11 D e c e m b e r 2 0 1 2 t h e R F P P a r t 2 w a s is s u e d a n d I w il l d e a l w i t h t h a t .
T h a t d e a l t w it h th e e v a l u a t i o n p r o c e s s , l o c a l c o n te n t a n d t h e l ik e .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :
On

3 September 2013

PFMA

O n 3 0 A p r il 2 0 1 3 t h e b i d s c lo s e d .
approval

was

r e c e iv e d .

On

2 D e c e m b e r 2 0 1 3 l e t te r s w e r e s e n t t o s e l e c t e d b i d d e r s a s k in g t h e m t o
20

c la r i fy R a n d i m p a c t o f T E t o s e l e c ti v e b id d e r s . T h is c la r i fi c a t io n c l o s e s
on 4 December 2013.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : O n 1 2 D e c e m b e r 2 0 1 3 w e h a v e t h e
r e p o r t s o f th e C r o s s F u n c ti o n a l Ev a lu a ti o n Te a m – I r e f e r t o t h o s e q u it e
e x t e n s iv e ly.

Page 133 of 247

20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

On 20 December there was a

r e q u e s t to b r e a k d o w n a n e x p la n a ti o n o f A n n e x u r e E c o s t s i n t h e R F P
with a closing date of 23 December 2013.
ADV MAHLAPE SELLO: Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D :

O n 4 J a n u a r y 2 0 1 4 th e r e w a s a

r e q u e s t f o r B e s t A n d F in a l O ff e r s – B A F O – w i th a c lo s i n g d a te o f
10 January 2014.

O n 1 5 J a n u a r y t h e r e w a s th e - t h e r e w e r e t h e

m e m o r a n d u m s fr o m th e C F E T. T h a t w il l b e c o m e c l e a r l a te r. I t i s C r o s s
10

F u n c ti o n a l E v a l u a t i o n Te a m F in a n c e t o th e 1 0 6 4 L o c o m o t iv e s S t e e r i n g
Committee.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

In January 2018 I performed an

a n a ly s is b u t I w il l c o m e to t h a t la t e r. Th e d a t e s u p t o th e r e a r e t h e k e y
p a t t e r n p o i n ts .
ADV MAHLAPE SELLO:

Before we leave that part of your evidence

p l e a s e g o b a c k t o y o u r p a r a g r a p h 1 5 7 .4 .
M R F R A N C I S Q U E N T I N C A L LA R D : 1 5 7 .4 .
ADV MAHLAPE SELLO:
20

Yo u s t a t e t h e r e 3 S e p t e m b e r 2 0 1 3 P F M A

approval?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

It has just been brought to my attention that

y o u m ig h t w a n t t o r e c o n s i d e r th a t d a t e .

P le a s e h a v e r e g a r d to

Annexure 82 at page 637.
M R F R A N C I S Q U E N T I N C A L LA R D : A n n e x u r e 8 2 o f p a g e 3 7 .

Page 134 of 247

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

W h ic h i s t h e a p p r o v e d – t h e M i n i s te r i a l

approval we referred to earlier and if that is the PFMA approval you
r e fe r t o in y o u r s ta t e m e n t a t 6 3 8 i t a p p e a r s t o b e d a t e d 3 A u g u s t a n d
n o t 3 S e p t e m b e r.
M R F R A N C I S Q U E N T I N C A L LA R D : M y a p o l o g i e s .
ADV MAHLAPE SELLO: So …
M R F R A N C I S Q U E N T I N C A L LA R D : I w o u l d li k e t o c o r r e c t th a t p l e a s e .
A D V M A H L A P E S E L L O : To c o r r e c t t h a t.
M R F R A N C I S Q U E N T I N C A L LA R D : 3 A u g u s t a n d n o t 3 S e p t e m b e r.
10

A D V M A H L A P E S E L L O : Th a n k y o u .
M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u .
A D V M A H L A P E S E L L O : W i t h t h a t c h a n g e C h a ir i t h a s b r o u g h t u s t o 1
o ’ c l o c k . M i g h t t h is b e a n a p p r o p r i a te ti m e to b r e a k f o r t h e lu n c h ?
CHAIRPERSON :

Th a n k y o u . W e w ill t a k e th e lu n c h a d j o u r n m e n t a n d

resume at 2o’ clock. We adjourn.
REGISTRAR: All rise.
I N Q U I RY A D J O U R N S
I N Q U I RY R E S U M E S
CHAIRPERSON : Okay you may proceed.
20

ADV MAHLAPE SELLO:

M r C a ll a r d b e f o r e w e b r o k e fo r l u n c h w e h a d

ju s t d e a lt w i t h y o u r t i m e l in e w h ic h is a t 1 5 7 , y o u t h e n fo ll o w t h a t u p
w i t h a lis t o f d o c u m e n ts w h ic h y o u lis t a t p a r a g r a p h s 1 5 8 a n d 1 5 9 w h ic h
a s y o u s t a te a r e r e l e v a n t to t h is p a r t ic u l a r s u b j e c t , a n d t h a t w e w i ll b e
r e fe r r i n g to f a ir l y fr e q u e n t ly. P l e a s e t a k e it t h a t w e h a v e t a k e n n o t e o f
y o u r l is t , o f th o s e a n n e x u r e s a n d I t h i n k w e m a y t h e n p r o c e e d t o

Page 135 of 247

20 MAY 2019 – DAY 96
p a r a g r a p h 1 6 1 , a n d w e d e a l w i th t h e s p e c i fi c s o f p r e s c r i b in g t h e r o le o f
Tr a n s n e t E n g in e e r i n g a s a s u b - c o n tr a c to r.
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Th a n k s v e r y m u c h ( i n d i s ti n c t) .

Yo u r m ic M r C a ll a r d , t h a n k y o u .

MR FRANCIS QUENTIN CALLARD :

Thank you very much. If I may

d r a w a n a n a l o g y a n d t h e a n a l o g y is t o t h e a r g u m e n t h e r e , I i n v i te y o u
t o a m e e ti n g , I s a y w e w il l b e h o l d i n g a m e e ti n g a t a d a t e a n d ti m e i n
t h e f u tu r e , t w o m o n t h s l a t e r I a s k w h y d id y o u n o t a t te n d th e m e e ti n g ,
a n d y o u r e s p o n d b u t y o u d i d n ’ t g i v e m e t h e d a t e a n d t i m e , th a t w i ll b e
10

t h e e s s e n c e o f t h r u s t w h ic h I a m p u tt i n g h e r e , o n t h e i m p a c t o f t h e r o l e
o f T E a s a s u b - c o n tr a c to r.
W e m a y b e s ta r t o ff th a t Tr a n s n e t E n g i n e e r i n g , a s i t w a s t h e n
c a l l e d , i s a n o p e r a ti n g d iv i s i o n o f Tr a n s n e t . T h e a c c o u n t i n g o f T E a s a
s u b - c o n t r a c t o r is p r o b le m a t ic a n d i n m y o p i n i o n c o n tr ib u t e d t o a
p o t e n t i a l ly fl a w e d e v a l u a t io n p r o c e s s .
ADV MAHLAPE SELLO:

Yo u a r e a t y o u r 1 6 1 .

M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Thank you.

MR FRANCIS QUENTIN CALLARD:
20

I’m at 161.

A n d I’ d e v e n g o s o f a r a s t o s a y,

c o n tr i b u t e d t o a fl a w e d e v a l u a ti o n p r o c e s s in t e r m s o f w h a t w e h a d s a i d
e a r l ie r.
ADV MAHLAPE SELLO:

O k a y.

MR FRANCIS QUENTIN CALLARD :

T h e r e q u e s t fo r p r o p o s a l , a n d

may I take us there please to page 634 Annexure 81.
ADV MAHLAPE SELLO:

Ye s .

Page 136 of 247

20 MAY 2019 – DAY 96
MR FRANCIS QUENTIN CALLARD:

A n n e x u r e 8 1 w a s fr o m t h e

r e q u e s t fo r p r o p o s a l p a r t 2 a n d I h a v e o n ly e x tr a c t e d , e s s e n ti a l ly th e
p a g e 1 a n d p a g e 3 o f th e d o c u m e n t s . P a g e 3 is t h e c r i t ic a l p a g e a n d i t
is 3 6 5 .
ADV MAHLAPE SELLO:

635?

MR FRANCIS QUENTIN CALLARD:

635 apologies 635 and I take us

t h r o u g h t o t h e s e c o n d p a r a g r a p h T R E s u b - c o n tr a c ti n g , TR E s t a n d in g f o r
t h e la t e r n a m e Tr a n s n e t R a il E n g i n e e r i n g .
ADV MAHLAPE SELLO:
10

O k a y.

M R F R A N C I S Q U E N T I N C A L LA R D :

If I may quote,

“ Pa r t ic ip a ti o n o f T R E in t h i s l o c o m o t iv e p r o c u r e m e n t p r o c e s s
w i ll b e p r e s c r i b e d a n d fu r t h e r d e ta il s w i ll fo ll o w a ft e r th e
is s u a n c e o f p a r t 2 o f th e R F P” ,
T h i s is p a r t 2 , i t ’s s a y in g , fu r t h e r d e t a i ls w il l f o l lo w.
ADV MAHLAPE SELLO:

S o p a r t 1 o f t h e R F P d i d n o t i n c lu d e s u b -

c o n tr a c ti n g o f T F E r e a d a lo n e a s a p a r t 1 .
MR FRANCIS QUENTIN CALLARD :

C o r r e c t , p a r t1 o f th e r e q u e s t f o r

p r o p o s a l p r i m a r il y d e a l t w it h t e c h n ic a l c o n s i d e r a t io n a n d i t e n a b l e d
b i d d e r s t o g e t to t h e n i t ty g r i t ty o f t h e t e c h n ic a l c o n s id e r a ti o n o f t h e
20

lo c o m o t iv e , t h i s d e a l t w i th o th e r a s p e c ts o f e v a l u a t io n a n d i f I m a y ta k e
u s t h r o u g h , p a r t ic u l a r l y to t h a t p o in t i t w a s th e – ja t h e e v a l u a t io n
p r o c e d u r e s . . .( i n t e r v e n t io n ) .
ADV MAHLAPE SELLO:

S o i t is p a r t 2 t h a t i n tr o d u c e s th e c o n c e p t o f

u s i n g T E a s a s u b - c o n tr a c t o r ?
M R F R A N C I S Q U E N T I N C A L LA R D :

Correct.

Page 137 of 247

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

A n d y o u s a y t h is is w h a t p a r t 2 t e l ls u s a t

p o i n t 2 o f … ( in t e r v e n ti o n ) .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Correct.

O k a y s o w e u n d e r s t a n d t h a t i t w il l b e

in tr o d u c e d i n s o m e f u t u r e ti m e a n d t h a t f u r t h e r d e ta il s w il l b e p r o v i d e d
a s r e g a r d s t h e in c l u s io n o f T E a s a s u b - c o n tr a c to r ?
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Okay yes, you may proceed.

MR FRANCIS QUENTIN CALLAR D:
10

T h a t is a s it s t a n d s h e r e y e s .

M ay I add from 6 – 163.1 the

w o r d in g i n th e R F P p a r t 2 f o r t h e s u p p ly o f 5 9 9 e le c t r ic – n e w e l e c tr ic
lo c o m o t iv e s i s i d e n ti c a l .
ADV MAHLAPE SELLO:

O k a y l e t m e j u s t – a t A n n e x u r e 8 1 is p a r t 2 o f

t h e R F P i n r e s p e c t o f t h e d ie s e l l o c o m o ti v e s .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Correct.

A n d y o u a r e s a y in g if w e h a v e r e g a r d t o th e

R F P p a r t2 o f t h e e l e c tr i c l o c o m o tiv e s t h e p r o v is i o n is id e n tic a l?
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

W e ’r e w i t h y o u .

M R F R A N C I S Q U E N T I N C A L LA R D :
20

CHAIRPERSON :

I t ’s id e n t ic a l .

Ye s .

Is t h a t i d e n ti c a l to p a r t 1 w h a t a r e y o u lo o k in g a t th a t

y o u s a y is id e n ti c a l w h a t a r e th e tw o th i n g s y o u a r e c o m p a r in g ?
MR FRANCIS QUENTIN CALLARD:

W h a t I ’ m s a y i n g is i d e n ti c a l Mr

C h a ir is t h a t c la u s e T R E s u b - c o n tr a c t in g o n p a g e 6 3 5 is id e n tic a l in t h e
e l e c tr ic a l a n d d i e s e l lo c o m o t iv e s .
ADV MAHLAPE SELLO:

L e t m e a s k a d i ff e r e n t – a n o t h e r q u e s t io n

Page 138 of 247

20 MAY 2019 – DAY 96
a n d s e e p e r h a p s w i ll h e l p c l a r i fy fo r t h e C h a ir. W e r e t w o R F P ’s is s u e d
in r e s p e c t o f d i e s e l a n d e l e c t r ic r e s p e c tiv e ly ?
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

So each one had a RFP1.

M R F R A N C I S Q U E N T I N C A L LA R D :
CHAIRPERSON :

I w o u l d i m a g in e th a t a t y e s .

Correct.

W e r e t h e y – c a n t h e y b e r e g a r d e d a s tw o s e p a r a te

R F P ’s o r s h o u ld t h e y b e r e g a r d e d a s t w o p a r ts o f o n e R F P ?
MR FRANCIS QUENTIN CALLARD:

T h e y w e r e t w o s e p a r a t e R F P ’s ,

o n e fo r 5 9 9 e le c t r ic s a n d a n o t h e r fo r 4 6 5 d ie s e ls .
10

CHAIRPERSON :

O k a y, a lr i g h t a n d y o u s a y t h a t t h e w o r d in g o f th e -

in r e g a r d t o t h e R F P i s i d e n ti c a l i n r e g a r d t o b o th ?
M R F R A N C I S Q U E N T IN C A L L A R D :

I n t h i s r e s p e c t i n p a r t2 o f th e

R F P f o r b o t h t h e e l e c tr i c a ls a n d th e d i e s e l s a r e i d e n ti c a l .
CHAIRPERSON :

O h o k a y.

MR FRANCIS QUENTIN CALLARD:

S o th is c l a u s e a p p l ie s t o b o t h

e l e c tr ic s a n d d i e s e l s .
CHAIRPERSON:

J a o k a y.

ADV MAHLAPE SELLO:

T h a n k y o u C h a i r, y e s .

MR FRANCIS QUENTIN CALLARD:
20

I h a v e f o u n d n o r e c o r d th a t th e

“ f u r th e r d e t a ils ” r e f e r r e d t o w e r e e v e r is s u e d o r f o r m e d p a r t o f t h e R F P
e i t h e r f o r d i e s e l o r e l e c tr ic l o c o m o ti v e s .
ADV MAHLAPE SELLO:

As c o n te m p l a te d b y i te m 2 o f p a r t 2 R F P.

MR FRANCIS QUENTIN CALLARD :

A s r e f e r r e d to - y e s a s p a r t2 o f

t h e R F P.
ADV MAHLAPE SELLO:

Thank you.

Page 139 of 247

20 MAY 2019 – DAY 96
MR FRANCIS QUENTIN CALLARD:

I go to my paragraph 163.3, in

t h e a b s e n c e o f t h e f u r t h e r d e ta il s th e p a r ti c i p a t io n o f T E , Tr a n s n e t
Engineering,

in

the

l o c o m o t iv e

procurement

process

cannot

be

c o n s i d e r e d p r e s c r i b e d , n o d e t a ils h a v e b e e n is s u e d .
ADV MAHLAPE SELLO:

T h a t ’s a v ie w y o u e x p r e s s ?

MR FRANCIS QUENTIN CALLARD:

Th a t’s a v ie w I e x p r e s s y e s . I

t h e n g o fu r t h e r t o m y p a r a g r a p h 1 6 4 , th e P M FA a p p r o v a l l e t te r f r o m t h e
h o n o u r a b le M in is t e r d a te d 3 r d A u g u s t 2 0 1 3 t a l k s t o , a n d I q u o t e f r o m
t h a t l e t te r – a n d t h is is A n n e x u r e 8 2 ,
“ T h e c r it ic a l r o l e o f Tr a n s n e t E n g in e e r in g

10

in

developing

s tr a t e g ic a n d in d u s tr ia l c a p a b ili t ie s r e l e v a n t t o t h e R a i l S u p p ly
C h a in ” .
ADV MAHLAPE SELLO:

Ye s .

MR FRANCIS QUENTIN CALLARD:

W e ’v e a lr e a d y s e e n t h a t t h e

le t t e r g r a n t s a p p r o v a l f o r t h e p r o c u r e m e n t o f t h e 1 0 6 4 lo c o m o t iv e s
s u b j e c t to in t e r a l ia t h e f o l lo w in g c o n d i ti o n :
“ A c l e a r s ta t e m e n t b y Tr a n s n e t w i th r e g a r d s t o T E ’s v i s i o n i n
t h e l o c o m o tiv e s u p p l y c h a i n a n d w h a t c a p a b il it i e s w i ll b e
n e e d e d t o m a k e t h i s r e v i s i o n a r e a l ty ” .
20

A D V M A H LA P E S E L L O :

N o w y o u s a y th i s A n n e x u r e 8 2 is d a t e d 3 r d o f

A u g u s t 2 0 1 3 , w h e n d i d t h e b id s c l o s e , w h e n w e r e th e b i d s s u b mi t t e d ?
MR FRANCIS QUENTIN CALLARD:

T h e b i d s c l o s e d p e r th e c o m m e n t

I m a d e e a r l ie r, th e b i d s c lo s e d o n t h e 3 0 t h o f A p r i l 2 0 1 3 . T h e p o i n t o f
t h is is th a t th is P M FA a p p r o v a l o f 3 r d A u g u s t i s r e c e iv e d a f t e r t h e b i d s
c lo s e d .

Page 140 of 247

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

O k a y.

M R F R A N C I S Q U E N T I N C A L L A R D : I m a k e th e p o i n t t h e r e , t h a t is t h e
p o i n t I m a d e …( in t e r v e n ti o n ) .
ADV MAHLAPE SELLO:

At 164(1).

MR FRANCIS QUENTIN CALLARD :

164(1) but I would add to the

p o i n t s o t h a t t h e P M FA a p p r o v a l c o u ld n o t r e a s o n a b ly b e p r e s c r i p ti o n t o
t h e b i d p r o c e s s a s th e b i d s h a d a lr e a d y c l o s e d .
ADV MAHLAPE SELLO:
CHAIRPERSON :
10

O k a y.

D o y o u k n o w w h e t h e r t h is w a s k n o w n t o t h e

M i n is t e r a t th e ti m e o f h i m g r a n ti n g th e le a v e , n a m e ly t h a t t h e p r o c e s s
w a s n o t w a i ti n g f o r h is a p p r o v a l t h e y h a d a c t u a ll y i s s u e d t h e R F P a n d
g o n e a h e a d i n t h e m e a n ti m e , y o u d o n ’ t k n o w t h a t?
MR FRANCIS QUENTIN CALLARD:

I t i s m y u n d e r s t a n d i n g Mr C h a ir

t h a t t h e R F P ’s w e r e is s u e d , th e y w e r e i s s u e d w i t h a q u a l if ic a ti o n t h a t
a w a r d w o u ld b e s u b j e c t t o P M FA a p p r o v a l d u r i n g t h is p r o c e s s t h e r e w a s
considerable

correspondence

b e tw e e n

M i n is t e r

and

the

N a t io n a l

Tr e a s u r y a s w e ll a r o u n d a s p e c ts r e l a ti n g t o e l e m e n ts o f th e R F P
p r o c e s s p a r t ic u l a r ly l o c a l c o n te n t a n d – s o r r y n o t l o c a l c o n te n t ,
p a r t ic u l a r ly r e la t in g t o t h e e v a l u a t io n c r i t e r i a o f t h e b i d s .
20

I have not

in c l u d e d th a t h e r e , t h a t c a n b e d e a l t w i th b y o th e r s , I w a s a d d r e s s i n g
m y s e l f s o l e ly to t h e r o le o f Tr a n s n e t E n g i n e e r i n g in t h e p r o c e s s b id .
CHAIRPERSON :

T h e r e w o u l d h a v e h a d to h a v e b e e n s o m e t h i n g

q u i te u r g e n t f o r t h e t o d o t h i n g s th is w a y i s n ’ t i t b e c a u s e i f y o u is s u e a
R F P i n t h e c ir c u m s t a n c e s w h e r e y o u n e e d t h e M i n i s te r ’s a p p r o v a l
b e f o r e y o u is s u e b u t y o u is s u e b e f o r e y o u g e t th e a p p r o v a l o n th e

Page 141 of 247

20 MAY 2019 – DAY 96
u n d e r s t a n d in g , o n t h e c o n d i t io n th a t t h e R F P is is s u e d s u b je c t t o t h e
a p p r o v a l o f th e M in is t e r b e in g o b t a i n e d . I f y o u t h e n s u b s e q u e n t ly g e t
t h e M i n i s t e r ’s a p p r o v a l b u t i t ’s s u b j e c t t o c o n d i ti o n s th a t y o u m i g h t n o t
h a v e e x p e c t e d , th e n y o u m i g h t h a v e t o d o t h e w h o le t h i n g .
MR FRANCIS QUENTIN CALLARD :
process yes.

T h a t w o u ld b e a r e a s o n a b le

O n e w o u l d s a y, I’ m s o r r y I d i d n o t g e t t h e r e q u is i te

a p p r o v a l I w a s s e e k in g I w i ll h a v e t o c a n c e l t h is b i d p r o c e s s a n d r e is s u e

given

th a t

my

superior

a u t h o r it y

has

imposed

c e r ta i n

r e q u ir e m e n t s y e s .
10

CHAIRPERSON :

Ye s o k a y.

ADV MAHLAPE SELLO:

I f I m a y j u s t f o ll o w u p o n t h a t Mr C a l la r d

p l e a s e h a v e r e g a r d to y o u r A n n e x u r e 8 2 w h ic h is t h e M i n i s te r i a l
a p p r o v a l a n d y o u s t a t e d th a t t h e b i d s h a d c lo s e d b y 3 0 t h A p r i l 2 0 1 3 .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Ye s .

I f y o u h a v e r e g a r d to t h e o p e n in g p a r a g r a p h

o f t h a t le t t e r th e M i n is t e r s t a te s :
“ I r e fe r to t h e P F M A s e c ti o n 5 4 a p p lic a ti o n d a t e d 2 n d M a y 2 0 1 3
r e g a r d in g th e a c q u is it i o n o f 1 0 6 4 lo c o m o t i v e s ” ,
S o w h e n t h e R F P w a s is s u e d t h e a p p r o v a l h a d n o t b e e n s o u g h t
20

a t t h e ti m e t h a t t h e b i d s c l o s e d t h e a p p r o v a l s ti ll h a d n o t b e e n s o u g h t
a s p e r t h a t le t t e r th a t a p p r o v a l i s o n l y s o u g h t o n t h e 2 n d o f M a y.
M R F R A N C I S Q U E N T IN C A L LA R D :

I b e l i e v e t h a t w a s th e p o in t I

m a d e w h e n I s a i d t h a t t h e b i d s – th e fi r s t R F P w a s is s u e d o n 1 6 J u ly
2 0 1 2 t h a t w a s p e r my i te m 1 5 7 . 1 y e s t h a t a tt e s t t o t h a t p o i n t .
A D V M A H LA P E S E L L O :

O k a y y o u c o n c l u d e o n th is p o in t to

Page 142 of 247

20 MAY 2019 – DAY 96
s a y … ( in t e r v e n ti o n ) .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

My conclusion on this.

Ye s .

MR FRANCIS QUENTIN CALLARD :

I s t h a t i f th e u s e o f Tr a n s n e t

E n g i n e e r i n g w a s t o b e p r e s c r i b e d t h e n t h e d e ta il s h o u l d h a v e b e e n
p r o v i d e d t i m e o u s ly b e f o r e th e c lo s i n g d a t e o f th e t e n d e r o r t h e t e n d e r
s h o u l d h a v e b e e n r e - is s u e d .
ADV MAHLAPE SELLO:

Ye s a n d t h e n y o u l e a d o n to y o u r n e x t s u b -

h e a d i n g w h ic h i s th e u s e o f th e p r e s c r i p ti o n o f T S M i t is a m e c h a n is m
10

t o a d j u s t th e p r i c e f o r e v a l u a t io n .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Correct.

C a n y o u t a k e u s t h r o u g h t h a t?

MR FRANCIS QUENTIN CALLARD:

C e r ta i n ly, m a y w e p le a s e h a v e

r e a d y A n n e x u r e – w e w i ll b e r e f e r r i n g t o A n n e x u r e s 8 3 , 8 4 , t h e s e a r e
t w o r e p o r ts 1 0 D e c e m b e r r e p o r ts 2 0 1 2 fr o m t h e C F E T F i n a n c e th a t is
t h e C r o s s - F u n c t i o n a l E v a lu a ti o n Te a m F i n a n c e a n d c o v e r s t h e u s e o f
t h e m a i n s u b - c o n tr a c t o r i n d e t a i l a n d i ts A n n e x u r e 8 4 / 8 4 .

I – if we

c o u l d g o p l e a s e t o A n n e x u r e s 8 3 / 8 4 p a g e s 6 5 1 a n d 6 9 1 r e s p e c tiv e ly.
CHAIRPERSON :
20

I’m sorry what pages?

MR FRANCIS QUENTIN CALLARD:

Page 651 – 651 is Annexure 83,

m a y I j u s t t h e n fir s t t a k e y o u t o p a g e 6 4 0 .
ADV MAHLAPE SELLO:

B e fo r e w e g e t in t o t h e d e t a i l o f t h a t , j u s t s o

t h a t w e fi n d w h e r e w e a r e , is it c o r r e c t th a t A n n e x u r e 8 3 is a r e p o r t o f
t h e C r o s s - F u n c ti o n a l E v a lu a ti o n Te a m Fi n a n c e i n r e s p e c t o f t h e e l e c tr ic
lo c o m o t iv e s ?

Page 143 of 247

20 MAY 2019 – DAY 96
MR FRANCIS QUENTIN CALLARD:

C o r r e c t, a s i t s t a t e s o n p a g e

640.
ADV MAHLAPE SELLO:

Ye s a n d A n n e x u r e 8 4 i s t h e s a m e r e p o r t

e x c e p t i n r e s p e c t o f t h e d ie s e l l o c o m o ti v e s ?
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Correct.

O k a y, th e n p l e a s e p r o c e e d .

MR FRANCIS QUENTIN CALLARD :

T h a n k y o u , i f w e t h e n t u r n to th e

relevant pages of 651 of 83.
ADV MAHLAPE SELLO:
10

Ye s .

M R F R A N C I S Q U E N T I N C A L LA R D :

A n d a t t h e s a m e ti m e h a v e

a v a i la b le 6 9 1 o f 8 4 .
ADV MAHLAPE SELLO:

Ye s .

M R F R A N C I S Q U E N T I N C A L LA R D :

B o th o f t h o s e h a v e h e a d i n g s ,

“ u s in g T E a s a m a i n s u b - c o n tr a c to r ” a n d I w o u l d q u o te fr o m th is - a n d I
q u o t e fr o m t h is u n d e r m y p a r a g r a p h 1 6 7 – s o r r y u n d e r p a r a g r a p h 1 6 1 .1
u n d e r t h e h e a d i n g “ u s in g T E a s a m a i n s u b - c o n tr a c t o r ” i t s t a t e s , in t e r
a l ia t h a t ,
“ T h e R F P p a r t 2 d ic t a t e s a s f o l l o w s , p a r t ic i p a t i o n o f T R E i n
t h is lo c o m o t iv e p r o c u r e m e n t p r o c e s s w il l b e p r e s c r i b e d ”
T h a t is in t h e fir s t b u l l e t p o i n t o n 6 5 1 a n d t h e f ir s t b u ll e t p o i n t

20
of 691.

ADV MAHLAPE SELLO:

Ye s .

MR FRANCIS QUENTIN CALLARD:

T h i s s ta t e m e n t w a s n o t q u a l i fi e d

a n d u n d e r th e s a m e h e a d i n g o f “ u s in g T E a s a m a i n s u b - c o n tr a c to r ” o n
page

12

it

reads

–

and

this

holds

Page 144 of 247

for

both

diesel

and

20 MAY 2019 – DAY 96
e l e c tr ic … ( i n te r v e n t io n ) .
A D V M A H LA P E S E L L O :

A n d th e p a g e 1 2 , s o r r y i f I m a y, i s a

n u m b e r e d p a g e 1 2 b u t o n th e p a g in a ti o n is 6 5 1 .
M R F R A N C I S Q U E N T IN C A L L A R D :

S o r r y n u m b e r p a g e 1 2 b u t i t is

s t il l o n 6 5 1 a n d 6 9 1 i t is – a n d I’ m q u o ti n g t h e r e fr o m t h e s e c o n d b u l le t
on those pages,
“ SC S

w h ic h

we

should

read

S u p p ly

C h a in

S e r v ic e s

in

c o n j u n c ti o n w i th T F R C E a n d Tr a n s n e t G C E , r e a d in g G r o u p C h i e f
E x e c u t iv e a n d G C F O , G r o u p C h i e f Fi n a n c i a l O ff ic e r, d e c id e d t h a t c l a r i ty
10

s h o u l d o n l y b e o b t a i n e d fr o m t h o s e b i d d e r s …( in t e r v e n ti o n ) .
ADV MAHLAPE SELLO:

I’ m s o r r y M r C a ll a r d I ’ m l o o k i n g a t th e s e c o n d

b u ll e t p o in t a t 6 5 1 a m I l o o k in g a t t h e r i g h t p l a c e ?
MR FRANCIS QUENTIN CALLARD:

I ’ m s o r r y – m y a p o l o g i e s c h a ir

it ’s t h e t h ir d b u ll e t m y a p o l o g i e s .
CHAIRPERSON :

O h o k a y.

ADV MAHLAPE SELLO:
CHAIRPERSON :

Ye s w e fo u n d t h e t h ir d b u ll e t y e s .

Ye s y o u c a n c o n ti n u e , t h a n k y o u .

MR FRANCIS QUENTIN CALLARD:

A n d I r e p e a t fr o m t h e r e S C S i n

c o n j u n c ti o n P F R C E a n d Tr a n s n e t G C E a n d G C F O d e c i d e d t h a t c la r i ty
20

s h o u l d o n l y b e o b ta i n e d f r o m t h o s e b id d e r s w h o i n c l u d e d t h e T E a s t h e
M a in s u b - c o n tr a c to r.

T h e c l a r it y r e q u e s t w a s t o e s ta b lis h w h a t

p r o p o r ti o n o f t h e b i d d e r s p r ic e r e la t e d to t h e u s e T E . I m o v e o n to t h e
n e x t b u l le t ,
“ Ac c o r d i n g ly t h e m e t h o d o l o g y p r o v i d e d t o C F E T F i n a n c e w a s
t h a t a l l b i d d e r s s h o u ld b e e v a l u a t e d e x c l u d in g th e u s e o f T E a s

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20 MAY 2019 – DAY 96
t h e m a in s u b - c o n t r a c t o r in o r d e r t o n o r m a lis e th e b a s e o n
w h ic h to e v a l u a te p r i c e ” .
A D V M A H LA P E S E L L O :

B e f o r e y o u c o m m e n t o n th e s e , o n t h e b u l le t

p o i n t s y o u ’ v e r e a d i n to th e r e c o r d , c a n I g e t a n u n d e r s t a n d in g h e r e
reads,
“ Ac c o r d i n g ly t h e m e t h o d o lo g y p r o v id e d t o C F E T F in a n c e ” ,
Do you see that?
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV
10

M A H LA P E

SELLO:

Ye s .
Do

we

know

who

p r o v id e d

that

methodology?
MR FRANCIS QUENTIN CALLARD:

I – in answer to that I would go to

168.2.
ADV MAHLAPE SELLO:

Ye s .

MR FRANCIS QUENTIN CALLARD:

W h e r e I s a y fr o m t h e w o r d i n g o f

t h e r e p o r t i t i s r e a s o n a b l e t o c o n c l u d e t h a t C F E T F in a n c e w e r e d ir e c t e d
in t h e p r ic i n g m e t h o d o l o g y, w h o d ir e c t e d t h is p r ic i n g w o u l d r e a s o n a b ly
o n ly c o m e – w o u ld r e a s o n a b l y c o m e fr o m S u p p l y C h a i n S e r v ic e s in
T F R , Tr a n s n e t Fr e ig h t R a il .
ADV MAHLAPE SELLO:
20

S o in r e s p o n s e t o my q u e s t io n d e fi n i t iv e

a n s w e r c a n o n ly b e o b t a i n e d fr o m S u p p l y C h a in ?
MR FRANCIS QUENTIN CALLARD:

Fr o m S u p p l y C h a i n S e r v ic e s a n d

t h e h e a d o f S u p p ly C h a i n S e r v i c e s .
ADV MAHLAPE SELLO:

Thank you, you may proceed.

MR FRANCIS QUENTIN CALLARD :

T h a n k y o u , I’ d j u s t li k e to c o v e r

p o i n t 1 6 8 th a t in b o t h th e r e p o r t s r e fe r r e d to a b o v e u n d e r h e a d i n g o f,

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20 MAY 2019 – DAY 96
m a t t e r s o f a p p r o v a l o f th e S t e e r i n g C o m m i t t e e , t h e C F E T F i n a n c e
r e q u e s t , in t e r a li a “ c a m e f r o m t h e r e p o r t” .

Th e a p p r o v a l o f th e p r ic e

m e t h o d o l o g y p r o v i d e d t o t h e C F E T F i n a n c e fo r e v a lu a ti o n p u r p o s e s t o
in c l u d e th e i m p a c t o f p r ic e . M y i n te r p r e t a ti o n o f t h is is th a t th e C F E T
Fi n a n c e t e a m s a id , w e u n d e r s t a n d th is d ir e c ti v e y o u ’v e g i v e n t o u s , b u t
it s h o u ld b e t a k e n a s a m a t te r f o r a p p r o v a l t o t h e L o c o m o tiv e S t e e r i n g
C o m m i t t e e . I h a v e d e le t e d t h e p a r a g r a p h 1 6 8 . 1 , I s u b s e q u e n tl y f o u n d
t h a t th e r e w a s a n a p p r o v a l f o r t h is .
ADV MAHLAPE SELLO:
10

An approval?

M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

There was an approval.

O k a y.

MR FRANCIS QUENTIN CALLARD :

M y u n d e r s t a n d in g , t h e r e w a s a n

approval.
ADV MAHLAPE SELLO:

A n d a p p r o v a l , ju s t f o r c o m p l e te n e s s i s b y

t h e L o c o m o t iv e S t e e r i n g C o m m i t t e e ?
MR FRANCIS QUENTIN CALLARD :

N o t h e a p p r o v a l I p ic k u p w a s

fr o m t h e B o a r d A c q u is it i o n s a n d D e v e l o p m e n t C o m m i t t e e i n i t ’s m e e ti n g
on – in February 2014.
CHAIRPERSON :
20

Th a t ’s th e B o a r d A c q u is i ti o n s a n d D i s p o s a l

Committee?
M R F R A N C I S Q U E N T I N C A L LA R D :
CHAIRPERSON :

Ye s .

I th i n k y o u s a i d D e v e l o p m e n t .

M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Development, my apologies.

I f y o u t u r n t o p a g e 6 6 5 a n d I’ m d o i n g t h is

b e c a u s e I’ d l ik e t o h a v e a n a p p r e c i a t i o n o f w h a t t h e p r o c e s s is , a t 6 6 5

Page 147 of 247

20 MAY 2019 – DAY 96
it e m 4 – n o b e f o r e t h a t th e h e a d i n g s a y s , “ m a t te r s f o r a p p r o v a l o f t h e
S t e e r i n g C o m m i t t e e ’ , t h e C F E T F i n a n c e r e q u e s ts a s p a r t o f t h is
evaluation and based on the contents of the report above then I go to
4 , a p p r o v a l o f th e p r i c e m e t h o d o l o g y p r o v i d e d to t h e C F E T F i n a n c e fo r
e v a l u a t i o n p u r p o s e s t o e x c l u d e t h e i m p a c t o f T E o n p r ic e .
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Ye s .

S o t h is w a s a r e q u e s t fr o m C F E T F i n a n c e t o

the Steering Committee.
M R F R A N C I S Q U E N T I N C A L LA R D :
10

ADV MAHLAPE SELLO:

Correct.

My q u e s t io n is , d o w e k n o w w h e t h e r t h e

a p p r o v a l b y t h e S t e e r in g C o m m i t t e e w a s o b ta in e d ?
MR FRANCIS QUENTIN CALLARD:

I d o n o t k n o w, I h a v e n o t f o u n d

it , I d o n o t k n o w.
ADV MAHLAPE SELLO:

A ll y o u k n o w i s t h a t th e B o a r d a p p r o v e d it .

MR FRANCIS QU ENTIN CALLARD:

I h a v e tr a c e d d o c u m e n t a ti o n t h a t

there was a BADC approval.
ADV MAHLAPE SELLO:

A n d w o u ld y o u k n o w h o w i t – t h e m a t t e r

came to be before BADC?
MR FRANCIS QUENTIN CALLARD:
20

T h e r e Wa s a m e m o r a n d u m t o

B A D C o u t li n i n g a ll t h e in c r e a s e i n a n t ic i p a te d p r ic e o f t h e tr a n s a c ti o n
a n d i t , i f I r e c a ll c o r r e c tly, i t w a s in c l u d e d i n t h a t b e c a u s e t h a t is h o w
BADC came to approve it.
ADV MAHLAPE SELLO:

In t h a t c o n te x t o k a y t h a n k y o u .

Then you

e x p r e s s y o u r v ie w a t … ( i n t e r v e n t i o n ) .
MR FRANCIS QUENTIN CALLARD:

I e x p r e s s m y v i e w in 1 6 8 . 3 t h a t I

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20 MAY 2019 – DAY 96
b e li e v e t h i s d ir e c t io n t o t h e C F E T w a s w r o n g a s a c c o r d i n g t o m y
r e a s o n in g t h e r o l e o f T E w a s n o t p r e s c r i b e d .
ADV MAHLAPE SELLO:

Ye s n o w o v e r le a f y o u s e e k to th e n

d e m o n s t r a t e t o u s h o w t h is T E p r ic in g m e th o d o l o g y w a s a c t u a ll y
a p p li e d t o th e b i d s .
M R F R A N C I S Q U E N T I N C A L LA R D :
CHAIRPERSON :

Ye s .

B e fo r e th a t w h a t w o u l d y o u s a y w e r e t h e

i m p l ic a t i o n s o f T E n o t b e i n g p r e s c r i b e d , in p a r t ic u l a r t h e p r a c tic a l
i m p l ic a t i o n s , i f a n y i n t h is w h o le p r o j e c t ?
10

MR FRANCIS QUENTIN CALLARD :

I f T E w e r e n o t to b e p r e s c r i b e d

t h e r e a r e a n u m b e r o f f a c il i ti e s in S o u t h A fr ic a o r b o d ie s w h ic h c o u l d
p r o v i d e c o m p l e te lo c o m o t iv e s .

I f I m a y u s e a n e x a m p l e M i ts u i c o u ld

a s s e m b le a n d p r o v id e a c o m p l e te l o c o m o tiv e w it h o u t u s i n g T E o th e r
lo c o m o t iv e s u p p li e r s li k e G e n e r a l E le c tr i c , if I m a y u s e t h e m , w e r e
p r o v i d in g Tr a n s n e t Fr e i g h t R a i l w i th l o c o m o tiv e s b u t t h e y w e r e u s in g T E
a s a s u b - c o n t r a c t o r. T h e y c o u l d h a v e u s e d a l t e r n a ti v e s u b - c o n tr a c t o r s
a s p a r t o f t h e ir fi n a l a s s e m b ly a n d c o m m i s s io n in g w o r k . I r e f e r b a c k t o
t h e d i s c u s s io n s w h i c h w e h a d w i t h t h e – a s a te a m w i th M r S i n g h w h e n
w e w e r e d e b a ti n g o n w h e t h e r t h e r o l e o f T E o r n o t s h o u l d b e i n c l u d e d
20

in t h e p r o c e s s d o c u m e n ts o r n o t w e h e l d t h a t , i f I m a y r e c a ll t h a t w e
h e l d w e s h o u l d b e n e u tr a l o n t h a t .

I f the role of TE was to be

p r e s c r i b e d , th e n i t w o u l d h a v e a i m p l ic a t i o n o n t h e O M ’s a s t o d ir e c t i n g
t h e m t o o n ly u s e o n e s u b - c o n tr a c t o r a n d t h a t w o u l d b e Tr a n s n e t R a il
E n g i n e e r i n g a n d t h e y w o u l d n o t b e a b l e to u s e fa c il i ti e s a n d / o r
o r g a n i s a t io n s o f t h e ir c h o i c e t h e y w o u ld b e o b li g e d t o u s e Tr a n s n e t R a il

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20 MAY 2019 – DAY 96
Engineering if it was prescribed.
CHAIRPERSON :

T h e u s e o f a n a l t e r n a ti v e t o T E c o u l d i t p u s h t h e

c o s ts u p o r n o t, th e u s e o f a n a l t e r n a t iv e o r n o t , in o t h e r w o r d s n o t
using TE?
MR FRANCIS QUENTIN CALLARD :

It could push the costs up Mr

C h a ir m a n b u t I th in k a s w e ’l l b e s e e in g fr o m h e r e it w o u ld h a v e l e d t o a
r e d u c t i o n in c o s t s i f Tr a n s n e t E n g in e e r i n g w e r e n o t u s e d .
CHAIRPERSON :

O h o k a y s o a t a p r a c ti c a l le v e l t h e f a c t th a t T E m a y

n o t h a v e b e e n p r e s c r i b e d w o u l d n ’ t h a v e a n y a d v e r s e e ff e c ts f o r t h e
10

p r o j e c t a s s u c h i f t h e e n ti t ie s c o u ld u s e a l t e r n a t iv e s ?
ADV MAHLAPE SELLO:

I s u b m i t th a t i f t h e e n ti ti e s c o u l d u s e

a l t e r n a t iv e s w e c o u l d h a v e p r o c u r e d t h e l o c o m o ti v e s a t a le s s e r p r i c e
t h a n b y u s i n g T E a s a m a i n s u b - c o n tr a c t o r.
CHAIRPERSON :

Okay thank you.

ADV MAHLAPE SELLO:

N o w b e fo r e w e a p p ly t h i s T E p r ic i n g

m e t h o d o l o g y, l e t’s j u s t t a k e a s t e p b a c k to t h e R F P ’s in r e s p e c t o f
e l e c tr ic – le t ’s d e a l w i t h e l e c tr ic lo c o m o t iv e s , h o w m a n y b id d e r s
s u b m i tt e d b id s ?
MR FRANCIS QU ENTIN CALLARD:
20

I h a v e h i g h li g h te d , t h e r e w e r e 7

b i d d e r s f o r t h e e l e c tr ic lo c o m o t iv e s .
ADV MAHLAPE SELLO:

N o w d i d a l l b i d d e r s c a te r fo r t h e in c l u s io n

o f T E a s th e s u b - c o n tr a c t o r ?
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

N o n o t a ll o f t h e m .

S o s o m e i n c l u d e d T E a n d s o m e d i d n o t?

MR FRANCIS QUENTIN CALLARD:

Some included TE and some did

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20 MAY 2019 – DAY 96
not, correct.
ADV MAHLAPE SELLO:

D o y o u k n o w w h y t h a t d i ff e r e n c e , w h y s o m e

d i d n o t i n c lu d e T E ?
MR FRANCIS QUENTIN CALLARD :

I c a n n o t t a l k t o t h a t d e fi n i t e l y

b u t b id d e r 7 , t h a t w a s M i ts u i h a d a fu ll y - f le d g e d m a n u fa c tu r i n g fa c il i ty
t h e y d i d n o t n e e d T E t o d e li v e r a l o c o m o ti v e a n d I r e a d , I i n te r p r e t t h a t
t h e y w e r e c o m f o r t a b l e w i th t h e ir o w n f a c i li ti e s .

Other bidders did not

h a v e a c c e s s to m a n u f a c t u r i n g f a c il it i e s a n d s a id – a p p r o a c h e d Tr a n s n e t
R a il E n g in e e r i n g t o s e e i f t h e y c o u l d b u il d a l o c o m o ti v e o r a s s e m b l e t h e
10

lo c o m o t iv e s fo r t h e m .
ADV MAHLAPE SELLO:

N o w t h e m a te r i a l f a c i li t ie s y o u s p e a k o f a r e

t h e y f a c il it i e s i n S o u t h A fr ic a ?
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

Ye s t h e y a r e .

Not in Japan?

MR FRANCIS QUENTIN CALLARD :

N o t i n J a p a n n o , th e y a r e

f a c i li t ie s i n S o u t h A f r ic a .
CHAIRPERSON :

Th e fa c t t h a t s o m e b i d d e r s in c l u d e d T E a s a s u b -

c o n tr a c to r, o th e r s d i d n ’ t d o e s i t n o t p o i n t t o t h e p o s s i b l e c o r r e c t n e s s o f
t h e v i e w y o u e x p r e s s a t 1 6 8 . 3 , n a m e ly t h a t T E w a s n o t p r e s c r ib e d
20

b e c a u s e i f t h e y w e r e n o t p r e s c r ib e d t h e y w o u ld h a v e f e l t t h a t t h e y w e r e
n o t o b li g e d t o i n c lu d e T E a s a s u b - c o n tr a c t o r ?
M R F R A N C I S Q U E N T I N C A L LA R D :

I r e l a t e t h a t to m y e a r l ie r

o p e n i n g a n a lo g y Mr C h a i r w h ic h s a i d T E w o u l d b e p r e s c r ib e d , d e t a i ls t o
f o ll o w, th e d e ta il s d i d n o t f o l lo w b y th e t i m e t h e b i d s c l o s e d a m I
p r e s c r i b e d to y o u a s T E ? Yo u i n v i te d m e t o t h e m e e t i n g b u t y o u h a v e n ’ t

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20 MAY 2019 – DAY 96
t o l d m e t h e d a t e a n d ti m e t h e r e fo r e I d o n o t fe e l p r e s c r i b e d to u s e T E , I
e q u a te d to t h a t a n a lo g y.
CHAIRPERSON :

O k a y.

ADV MAHLAPE SELLO:

Th a n k y o u C h a ir.

O k a y t h e n le t ’s tu r n t o

t h e a p p lic a ti o n o f t h is T E p r ic i n g m e t h o d o l o g y t o th e b i d s .
MR FRANCIS QUENTIN CALLARD :

R ig h t I ’ d li k e t o fir s t a d d r e s s t h e

5 9 9 e l e c tr ic l o c o m o ti v e s .
ADV MAHLAPE SELLO:

O k a y.

MR FRANCIS QUENTIN CALLARD : Page 12 of Annexure 83 described
10

h o w Fr e i g h t R a i l S u p p ly C h a in S e r v ic e s n o r m a l is e d t h e b id p r ic e
b e t w e e n t h o s e w h o u s e d T E a s a s u b - c o n t r a c t o r a n d th o s e w h o d i d n o t
u s e T E a s a s u b - c o n tr a c to r. C o u ld I d ir e c t u s th e n p l e a s e t o A n n e x u r e
8 3 p a g e 1 2 w h ic h i s 6 5 1 i n t h e b u n d l e .
A D V M A H L A P E S E L L O : Ye s .
CHAIRPERSON : Are you referring us to …
M R F R A N C I S Q U E N T I N C A L LA R D : P a g e – t o 6 5 1 .
CHAIRPERSON : 651?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : O h o k a y. I d i d n o t c l o s e t h a t p a g e s o I t h o u g h t y o u

20

w e r e r e f e r r i n g u s t o a n o t h e r o n e . O k a y.
M R F R A N C I S Q U E N T I N C A L L A R D : If I m a y I w il l t a k e it f ir s t t h r o u g h
a s I h a v e i t i n th e s t a te m e n t o f m y s t a t e m e n t 1 6 9 . 2 . T h is n o r m a li s a t io n
r e s u l t e d i n t h r e e b i d d e r s w h o u s e d T E a s a s u b - c o n t r a c to r b e in g a s k e d
t o s p e c i fy w i t h o u t a p p a r e n t q u a l i fic a ti o n t h e a m o u n t t h e y w o u l d s a v e b y
n o t u s i n g T E a s a m a i n s u b - c o n tr a c to r. T h a t i s d ir e c t e d t o b u l le t p o in t

Page 152 of 247

20 MAY 2019 – DAY 96
1 , 2 , 3 , 4 , 5 – t h e 5 t h b u ll e t p o i n t w h ic h r e a d s o n p a g e 6 5 1 .
“ Ba s e d o n th is d e c is i o n c l a r i ty r e s p o n s e s w e r e o n ly
is s u e d t o b id d e r 1 , 2 a n d 5 th o s e b i d d e r s w h o
in d i c a t e d th e – t h a t s h o u ld r e a d t h o s e b i d d e r s w h o
in d i c a t e d t h e u s e o f T E a s a s u b - c o n tr a c t o r w h a t
w o u ld b e th e ir i m p a c t o f n o t u s i n g T E a s a s u b c o n tr a c to r ? ”
MS THABILE FUHRMANN :
b u ll e t
10

point

and

that

B e f o r e y o u p r o c e e d m a y I r e fe r t o t h e 4 t h

is

for

purposes

of

u n d e r s t a n d in g

n o r m a l is a ti o n – n o r m a l is i n g t h e b i d p r ic e m e a n s ?

what

T h e fo u r t h b u ll e t

p o i n t s t a te s t h a t t h e – a c c o r d i n g ly t h e m e th o d o l o g y p r o v i d e d to C R E T
Fi n a n c e w a s t h a t a ll b i d d e r s s h o u l d b e e v a l u a t e d e x c l u d i n g th e u s e o f
T E a s a m a i n s u b - c o n t r a c t o r i n o r d e r t o n o r ma li s e th e b a s e o n w h ic h t o
evaluate the price.
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELL O : Okay yes.
MR FRANCIS QUENTIN CALLARD:

C o r r e c t . T h e i m p l ic a t i o n s o f t h a t

b e i n g i n m i n d t h e u n d e r s t a n d i n g t h a t f o l lo w s fr o m t h is is i f y o u d i d n o t
u s e Tr a n s n e t E n g i n e e r in g a s a s u b - c o n tr a c t o r w h a t w o u l d y o u r p r i c e
20

have been?

And we are going to evaluate on what your price would

h a v e b e e n i f y o u d id n o t u s e Tr a n s n e t E n g i n e e r in g a s a s u b - c o n tr a c t o r.
A D V M A H LA P E S E L L O : A n d s o t h e n th e – y o u r 5 t h b u ll e t p o i n t f o l l o w
u p th a t b a s e d o n t h i s d e c i s i o n c la r i ty r e s p o n s e s w e r e o n ly i s s u e d t o
bidder 1, 2 and 5?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .

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20 MAY 2019 – DAY 96
A D V M A H LA P E S E L L O : T h o s e b id d e r s w h o i n d i c a t e d t h e u s e o f T E a s
a s u b - c o n tr a c t o r ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELL O : 4,6 7 did no?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Th a n k y o u .
CHAIRPERSON :

J u s t t o r e m in d m e g o i n g b a c k t o t h e M in is t e r ’s

approval by the way did he say TE must be used as a
M R F R A N C I S Q U E N T I N C A L LA R D : S u b - c o n tr a c t o r.
10

C H A I R P E R S O N : S u b - c o n tr a c t o r ?
M R F R A N C I S Q U E N T I N C A L LA R D : N o .
C H A I R P E R S O N : N o i t d i d n o t?
M R F R A N C I S Q U E N T I N C A L L A R D : It d i d n o t s p e c i fi c a ll y s a y t h a t a n d
if I m a y ju s t g o b a c k t o th a t fo r a b s o l u te c l a r i t y M r C h a ir.
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

A n d w a s t h e r e a s o n fo r i n c l u d i n g

t h is . T h e P F M A – I a m r e a d i n g b a c k fr o m m y 1 6 4 .
“ T h e P F M A a p p r o v a l le t t e r t a lk s to t h e c r i t ic a l r o l e o f
Tr a n s n e t
20

E n g in e e r i n g

in

d e v e lo p in g

s tr a te g ic

in d i v i d u a l c a p a b i li t ie s r e l e v a n t to t h e S u p p ly C h a i n
a n d i t g a v e i n t e r a l ia t h e f o l l o w in g c o n d i ti o n :
A c le a r s t a te m e n t b y Tr a n s n e t w i t h r e g a r d t o T E ’s
v is io n i n t h e l o c o m o t iv e s u p p ly c h a i n a n d w h a t
c a p a b il it i e s w i ll b e n e e d e d to m a k e t h i s v i s i o n a
r e a l it y.

T h e P F M A a p p r o v a l w h ic h I s t a t e d o e s n o t

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20 MAY 2019 – DAY 96
p r e s c r i b e t h a t T E w il l b e a s u b - c o n tr a c to r.”
A D V M A H L A P E S E L L O : Th a n k y o u .
CHAIRPERSON :

It

a c tu a lly

s p e c if ic a l ly

said

t h a t is

not

being

p r e s c r i b e d . T E i s n o t b e in g p r e s c r ib e d a s a s u b - c o n tr a c t o r.
MR FRANCIS QUENTIN CALLARD:

It asks for a lot of deal around it

b u t it d i d n o t p r e s c r i b e T E a s a s u b - c o n t r a c t o r.
CHAIRPERSON:

Ye s o k a y.

O k a y.

So - so what was being done now

w h e n t h e b id d e r s w e r e b e i n g a s k e d t o s a y w h a t t h e ir p r i c e w o u ld b e i f
T E w a s n o t a s u b - c o n tr a c t o r w a s th is b e in g d o n e i n th e li g h t o f t h e
10

M i n is t e r ia l a p p r o v a l n o t i n c l u d i n g a p r e s c r i b e d – t h a t T E b e p r e s c r i b e d ?
M R F R A N C I S Q U E N T I N C A L LA R D : I w il l …
C H A I R P E R S O N : Yo u w o u l d n o t b e s u r e ?
M R F R A N C I S Q U E N T I N C A L LA R D : I w il l j u m p to t h e c o n c lu s i o n M r …
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D : Mr C h a ir.
CHAIRPERSON : Ja.
M R FR A N C I S Q U E N T I N C A L L A R D : B u t I b e li e v e t h a t th is p r o c e s s w a s
fl a w e d .
CHAIRPERSON : yes.

20

M R F R A N C I S Q U E N T IN C A L L A R D :

A n d b e c a u s e o f t h is p r o c e s s b y

a s k in g s e le c t e d b id d e r s w h o w o u ld u s e T E
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : To q u o te w i t h o u t q u a l i fi c a t io n
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : W h a t w il l b e y o u r p r ic e i f y o u d i d

Page 155 of 247

20 MAY 2019 – DAY 96
not use TE
C H A I R P E R S O N : Ye s .
MR

FRANCIS

QUENTIN

CALLARD :

Ar t if ic ia ll y

i n fl u e n c e d

the

e v a l u a t i o n o f t h e b id p r ic e .
C H A I R P E R S O N : Ye s . O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s w h e r e t h is is l e a d i n g t o .
CHAIRPERSON : Thank you.
A D V M A H L A P E S E L L O : T h a n k y o u C h a ir. Ye s y o u – w e w e r e d e a l in g
w i t h a – w i th p a g e 6 5 1 y o u r a n n e x u r e 8 3 h a v i n g d e a lt w i th b u l le t p o i n ts
10

4 and 5.
M R FR A N C I S Q U E N T I N C A L L A R D : T h a n k y o u . If I m a y c o m e – r e v e r t
b a c k th e n t o m y s t a t e m e n t o f 1 6 9 . 2 m y p a r a g r a p h 1 6 9 . 2 .
A D V M A H L A P E S E L L O : Ye s .
MR

FR A N C I S

QUENTIN

CALLARD :

And

repeat

again.

T h is

n o r m a l is a ti o n r e s u l t e d i n th r e e b i d d e r s w h o u s e d T E a s a s u b c o n tr a c to r b e i n g a s k e d t o s p e c i fy.

W i th o u t a p p a r e n t q u a li fi c a t io n th e

a m o u n t w o u ld s a v e b y n o t u s i n g T E a s a m a j o r s u b - c o n t r a c t o r.
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:
20

Page 13 of that same report and

that is Annexure – page 652.
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

D e s c r i b e s c o n fu s i o n r e l a ti n g t o

b i d d e r 2 th a t i s C S R u s in g T E a n d w h e t h e r th e a m o u n t w a s – w h e r e th e
a m o u n t t h e y w o u l d s a v e w a s R 3 . 4 8 m i ll i o n o r 5 . 4 9 0 m i ll io n .
A D V M A H L A P E S E L L O : Ye s .

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L L A R D : To c le a r u p t h is c o n f u s io n p a g e 1 3
f u r th e r d e s c r i b e s a t e le p h o n ic c o n v e r s a ti o n w i th b id d e r 2 o n t h e
e v e n i n g o f th e 4 D e c e m b e r 2 0 1 3 .

W h i c h r e s u lt e d in a 2 . 0 1 m i ll io n

d i ff e r e n c e t h a t i s th e d i ff e r e n c e b e t w e e n 5 . 4 9 0 m i ll io n a n d 3 . 4 8 0 m i ll io n
being declared a discount.

T h a t 2 m i ll i o n w a s d e c l a r e d a d is c o u n t .

S u p p ly C h a i n S e r v i c e s t h e n b a s e d o n d is c u s s io n s w i t h th e G r o u p C h i e f
E x e c u t iv e a n d t h e G r o u p C h ie f F i n a n c i a l O ffi c e r a d v is e d t h e C F E T t e a m
t h a t t h e e v a l u a t i o n s h o u ld p r o c e e d e x c l u d in g t h i s p o t e n t i a l d is c o u n t . I
w i ll s h o w l a t e r a n d t a k e la t e r t h a t th is d i s c o u n t w a s la t e r t a k e n b a c k
10

a n d i n f a c t in c l u d e d in th e e v a lu a ti o n a n d l a t e r – i t w a s l a te r i n c l u d e d
in a p r ic e e v a l u a t io n .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L L A R D : B u t I w o u ld f o r t h e m o m e n t t h e n g o
t o p a g e 1 3 – s o r r y m y 1 6 9 . 6 p a g e 1 3 s ta t e s t h a t t h e i m p a c t o f e x c lu d in g
T E fr o m t h e n o r m a lis e d b a s e p r ic i n g a s f o ll o w s : A n d w e w il l s e e t h e r e
t h a t b i d d e r 1 th a t w a s B o m b a r d ie r w a s a ffo r d e d a …
CHAIRPERSON :

W e l l M r C a ll a r d l e t u s b e c o n s i s t e n t w i t h t h e p a g e

numbers.
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.
20

CHAIRPERSON : Are you using the report page numbers.
M R F R A N C I S Q U E N T I N C A L LA R D : M y a p o l o g i e s M r C h a ir.
C H A I R P E R S O N : O r [ i n d is ti n c t ] p a g i n a te d o n e ?
MR FRANCIS QUENTIN CALLARD : The report page number – sorry my
s t a te m e n t p a g e n u m b e r 4 4 I a m r e f e r r in g t o t h e t a b l e th e r e w h i c h is th e
s a m e t a b l e is a t th e b o t t o m o f p a g e 6 5 2 I h a v e e x tr a c t e d t h e s a m e

Page 157 of 247

20 MAY 2019 – DAY 96
t a b le .
C H A I R P E R S O N : O k a y th a n k y o u . Ye s .
A D V M A H L A P E S E L L O : Ye s M r C a l l a r d .
MR FRANCIS QUENTIN CALLARD:

W h a t t h is ta b l e s h o w s i s t h a t

b i d d e r 1 ’s w a s n o w fa v o u r a b ly i n fl u e n c e d b y 1 . 9 m ill i o n r o u n d e d fi g u r e s
a n d b i d d e r 2 ’s C S R b y 3 . 4 8 m i ll io n i n th e p r ic e e v a lu a ti o n p r o c e s s .
ADV MAHLAPE SELLO:

S o a r e w e t h e n t o u n d e r s t a n d th a t t o th e

r e q u e s t t h a t t h e y e x c l u d e t h e c o s t f o r u s in g T E a s a s u b - c o n tr a c t o r.
B o m b a r d i e r in d i c a t e d t h a t t h e ir p r ic e w o u l d d r o p b y 1 . 9 b i lli o n .
10

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

A n d C S R i n d ic a t e d t h e p r ic e w o u l d d r o p b y

3 .4 b i ll io n .
M R F R A N C I S Q U E N T I N C A L LA R D :

I f t h e y d id n o t u s e T E a s a s u b -

c o n tr a c to r.
A D V M A H L A P E S E L L O : I f th e y d i d n o t u s e T E .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

N o w in s o f a r a s C R is c o n c e r n e d i f y o u g o

back to your 169.4 no 169.3 and 169.4. The table you refer asked you
a t p a g e 4 3 f o r C S R in d ic a t e s a r e d u c ti o n o f 3 .4 b il li o n . W h e r e d o e s th e
20

fi g u r e o f 5 . 4 b i lli o n a s a p o t e n ti a l a m o u n t t o d e d u c t c o m e fr o m ?
MR FRANCIS QUENTIN CALLARD:

I r e f e r th a t 5 .4 9 0 m il li o n c o m e s

fr o m 6 5 2 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : It c o m e s fr o m th e 3 r d b u ll e t p o i n t .
A D V M A H L A P E S E L L O : Ye s .

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20 MAY 2019 – DAY 96
MR FRANCIS QUENTIN CALLARD:

S o r r y t h e 2 n d b u l le t p o in t t h e 3 r d

p a r a g r a p h a n d if I r e a d fr o m t h a t – s o r r y m a y I b a c k tr a c k – m a y I
b a c k tr a c k ? I t is t h e l a s t b u ll e t p o i n t o n p a g e 6 5 1 . T h e l a s t b u ll e t p o in t
on page 651.
“ Bi d d e r 2 p r o v id e d th e r e q u ir e d i n f o r m a ti o n h o w e v e r
we

n o te d

that

t h e ir

new

s u b m i t te d

bid

prices

e x c lu d in g T E a s a s u b - c o n tr a c t o r d i d n o t r e c o n c i le to
t h e ir o r i g i n a l b i d p r ic e .”
A D V M A H L A P E S E L L O : Ye s .
10

M R F R A N C I S Q U E N T I N C A L LA R D :
“The

d i ff e r e n c e

lo c o m o t iv e .
evaluation

noted

was

2.01

m ill i o n

per

T h i s p o s e d a p o t e n t ia l r i s k t o t h e
of

th e

p r ic e

and

the

C E F T Fi n a n c e

s u b s e q u e n t ly c o n s u l t e d w i t h S u p p ly C h a i n s o th is –
t o e x p la in t h e ir c o n c e r n a s t h e i m p a c t o f t h i s
d i ff e r e n c e w a s s i g n i fic a n t i n r e l a ti o n to t h e f in a l
s c o r i n g o n p r ic e .”
T h e n e x t b u l l e t d e s c r i b e s h o w th e y r e s o lv e d t h is t h a t t h e y e n g a g e d w i t h
a t e le p h o n e c a l l w it h b i d d e r 2 o n t h e e v e n i n g o f t h e 4 D e c e m b e r 2 0 1 3 .
20

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L LA R D :

T h e s e c o n d b u l le t a n d t h e t h ir d

p a r a g r a p h th e n i n d ic a te s t h a t b i d d e r 2 i n d ic a te d th a t t h e d i ffe r e n c e
r e l a t e d t o a d i s c o u n t o ffe r e d o n th e ir o r i g in a l p r ic e .

It was then

e x p l a i n e d a n d I p a r a p h r a s e t h a t th is w a s n o t w h e r e c la r i ty h a d b e e n
sought.

S u b s e q u e n t t o t h e t e le p h o n e p h o n ic c o n v e r s a ti o n b id d e r 2

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20 MAY 2019 – DAY 96
s u b m i tt e d a n e w c l a r i ty. I t w a s n o te d h o w e v e r th a t th is c la r i ty s e e m e d
t o h a v e r e f le c te d t h e d is c o u n t i n t h e T E p o r t i o n o f t h e n e w b id p r ic e .
T h i s i n d ic a te s c o n f u s i o n a s t o t h is p r o c e s s .

B i d d e r 2 o r i g i n a ll y

s u b m i tt e d a r e d u c t i o n i n b i d p r ic e to t h e T E p o r ti o n o f 3 . 4 mi ll i o n p e r
lo c o m o t iv e a n d a s u b s e q u e n t s u b m i s s i o n fr o m t h e m in d i c a t e d t o b e
5 .4 9 0 m i ll io n p e r lo c o m o t iv e . I ta k e t o t h e n e x t b u ll e t. C F E T F in a n c e
t h e n f u r t h e r e n g a g e d S u p p ly C h a i n S e r v i c e s to p r o v i d e g u id a n c e o n
t h e ir [i n d i s t i n c t ] a s w e w e r e u n a b le t o d e t e r m in e t h e a p p r o p r i a te r a t e
f o r w a r d . T h e m a i n c o n c e r n f r o m t h e C F E T F i n a n c e w a s t h e u n c e r ta in t y
10

o f w h e t h e r o r n o t b i d d e r 2 m a y h a v e s u b s e q u e n tly h a v e in c l u d e d t h is
d is c o u n t p o r t io n o f 2 m il li o n i n th e ir p r i c e t h e r e b y h a v in g t h e p o te n ti a l
i m p a c t o f a f a ir l y p r e j u d i c e th in g o t h e r b id d e r s i n t h e e v a l u a t i o n
p r o c e s s . Th e n e x t p a r a g r a p h d e a l s w i th h o w t h e y e v a l u a te d it . C F E T
Fi n a n c e

was

advised

by

S u p p ly

Chain

S e r v ic e s

th a t

based

on

d is c u s s io n s w i th th e G r o u p C h i e f E x e c u tiv e a n d th e G r o u p C h i e f
Fi n a n c i a l O ff ic e r th a t th e e v a l u a t io n s h o u l d p r o c e e d o n t h e b a s is
e x c lu d in g th is p o t e n t ia l d is c o u n t a n d a s s u c h th e C F E T F i n a n c e u t il is e d
r e d u c t i o n p r ic e o f 3 . 4 8 0 f o r th e e v a l u a t i o n .

T h a t is w h e r e th e 5 . 9

c o m e s a n d I th in k w h a t t h is d o e s d e m o n s tr a t e i s t h e r e i s s ig n if ic a n t
20

c o n fu s i o n i n t h e i n te r p r e t a t i o n o f w h a t d o e s – is m e a n t b y a n i m p a c t o f
a TE price.
ADV MAHLAPE SELLO: Hm.
MR FRANCIS QUENTIN CALLARD:

And as we have seen and the

C F E T F i n a n c e te a m c o r r e c tl y p o i n t o u t t h e p o t e n t ia l i m p a c t t h is c o u ld
h a v e o n t h e p r ic e e v a l u a t io n .

Page 160 of 247

20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CALLARD :

T h e C F E T t e a m t h e n c o m p le t e d

t h e ir a n a ly s is a n d th e r e s u l t o f t h a t i s t h e t a b le w h ic h w e h a v e a t t h e
b o t t o m o f p a g e 6 5 2 a n d th e b o t t o m o f m y – a n d a t t h e t o p o f m y
s t a te m e n t p a g e 4 4 .
ADV MAHLAPE SELLO: Ja.
M R F R A N C I S Q U E N T I N C A L LA R D : T h o s e t w o ta b l e s a r e o n e a n d th e
s a m e a n d it s h o w s th e p r i c e i m p a c t t h a t t h e y w e r e t a k e n o u t o r t h a t w a s
b r o u g h t i n t o c o n s i d e r a ti o n .
10

A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : To s h o w w h a t t h i s m e a n s s o r r y …
A D V M A H L A P E S E L L O : S o r r y b e f o r e y o u m o v e o n y o u w i ll r e c a ll t h a t
fr o m y o u r A n n e x u r e 8 3 a t p a g e 6 5 1 w e r e a d t h a t b a s e d o n th e d e c is io n
t o s e e k c l a r it y s o a s t o n o r m a l is e t h e b a s e o n w h ic h t o e v a lu a te p r i c e
t h e r e s p o n s e s w e r e o n l y – w e r e s o u g h t o n ly fr o m b i d d e r 1 , 2 a n d 5 . A t
your page 44 that table…
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

Yo u in d i c a t e a s u m p r o v i d e d b y b i d d e r 1 ,

bidder 2 and under 5 you have zero.
20

M R F R A N C I S Q U E N T I N C A L LA R D : U n d e r b i d d e r 5 I h a v e z e r o y e s .
ADV MAHLAPE SELL O : Why – was there no response from bidder 5 or
w h a t w a s t h e p o s it i o n ?
MR FRANCIS QUENTIN CALLARD:

N o t h e p o i n t w a s m a d e th a t i f I

may take you through there to page 651.
A D V M A H L A P E S E L L O : Ye s .

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : T h e s e c o n d l a s t b u ll e t .
A D V M A H L A P E S E L L O : Th e s u b b u l le t p o in t ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h e s u b b u l le t p o i n t .
A D V M A H L A P E S E L L O : Ye s .
M R FR A N C I S Q U E N T I N C A L L A R D :

B i d d e r 5 p r o v i d e d th e r e q u ir e d

in f o r m a ti o n a n d i n d ic a te d t h e r e w o u ld b e n o i m p a c t o n t h e b i d p r i c e p e r
lo c o m o t iv e i f T E w a s n o t u s e d a s a s u b - c o n tr a c to r.
A D V M A H L A P E S E L L O : O k a y.
M R FR A N C I S Q U E N T I N C A L L A R D :
10

I n f a c t w h a t h e is s a y in g n o

change.
A D V M A H L A P E S E L L O : S o b i d d e r 1 is B o m b a r d i e r, b id d e r 2 is C S R .
M R F R A N C I S Q U E N T I N C A L LA R D : C S R .
A D V M A H L A P E S E L L O : A n d r e m in d u s p l e a s e b i d d e r 5 is ?
M R F R A N C I S Q U E N T I N C A L LA R D : O k a y w e w i ll tr a c k i t d o w n .
M R F R A N C I S Q U E N T I N C A L LA R D : W e w i ll tr a c k i t d o w n I t h i n k .
A D V M A H L A P E S E L L O : B u t w e k n o w t h a t th e r e i s n o c h a n g e w h e t h e r
o r n o t th e y u s e d T E ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Th e n y o u m a y p r o c e e d th a n k y o u .

20

M R FR A N C I S Q U E N T I N C A L L A R D :

I f I m a y th e n t a k e u s t o h o w th is

w a s u s e d a n d I d e a l w i t h t h i s i n p a g e 4 4 m y p a r a g r a p h 1 6 9 . 7 .1 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : T h e T E c o m p o n e n t s u b tr a c t e d b y –
s o r r y c o r r e c ti o n , c o r r e c ti o n .

M a y I g o to 1 6 9 . 7 p a g e 4 0 o f t h e C F E T

R e p o r t a n d p a g e 4 0 is p a g e 7 6 9 .

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20 MAY 2019 – DAY 96
ADV MAHLAPE SELL O : 679.
M R F R A N C I S Q U E N T I N C A L LA R D : 6 7 9 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : O f t h e p a c k .
A D V M A H L A P E S E L L O : C h a ir a n d Mr C a ll a r d a t p a r a g r a p h 1 2 o f y o u r
s u p p l e m e n t a r y s t a t e m e n t y o u s t a te t h a t y o u i n tr o d u c e a l e g i b l e c o p y o f
t h a t p a g e C h a ir a n d i t is i n t h e s u p p l e m e n ta r y b u n d le m a r k e d j u s t a s
Annexure 83 page 679A.

A n d th a t w o u l d C h a ir a p p e a r a t p a g e 2 3 o f

t h a t s u p p l e m e n t a r y.
10

CHAIRPERSON : Thank you.
A D V M A H L A P E S E L L O : Th a n k y o u C h a ir.
C H A I R P E R S O N : G o t i t . S o th a t is a c le a r e r c o p y.
A D V M A H L A P E S E L L O : Th a t i s a c le a r e r c o p y o f 6 7 9 .
CHAIRPERSON : Oh.
ADV MAHLAPE SELL O : Of Annex – 679 of Annexure 83.
CHAIRPERSON : Thank you.
A D V M A H L A P E S E L L O : Th a n k y o u C h a ir.
C H A I R P E R S O N : O k a y.
A D V M A H L A P E S E L L O : Ye s M r C a l l a r d .

20

M R F R A N C I S Q U E N T IN C A L L A R D :

Thank you.

N o w r e a d i n g fr o m

p a g e 2 3 o f t h e s u p p l e m e n ta r y a n d t h i s is A n n e x u r e h e a d e d A n n e x u r e E
r e c o n c i li a ti o n o f p r i c e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : A m o n g s t o t h e r th i n g s i t d e t a i ls t h e
w h o le m a k e u p o f a l o c o m o ti v e p r ic e a n d i m p a c ts o f a – s o m e h e d g i n g

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20 MAY 2019 – DAY 96
a n d e s c a l a t i o n w h ic h w e r e p u t i n b u t th e p o i n t I w o u l d li k e t o t a k e u s
t h r o u g h p l e a s e is t o t h e t h ir d li n e f r o m t h e b o t t o m s u b t o t a l 3 t o ta l p r i c e
of 4TE adjustment.
A D V M A H L A P E S E L L O : A n d th a t is t h ir d l in e fr o m t h e b o t t o m .
M R F R A N C I S Q U E N T I N C A L LA R D : T h ir d li n e fr o m t h e b o tt o m .
A D V M A H L A P E S E L L O : I n b o ld r i g h t ?
M R F R A N C I S Q U E N T IN C A L L A R D :

T h i r d li n e fr o m th e b o tt o m y e s .

S u b to t a l 3 to t a l p r i c e b e fo r e T E a d j u s t m e n t a n d th a t is in b o l d .
A D V M A H L A P E S E L L O : O k a y w e h a v e lo c a te d i t .
10

M R F R A N C I S Q U E N T I N C A L L A R D : W e h a v e t h e – i f w e h a v e t h a t li n e
t h e n e x t l in e s a y s t h e i m p a c t o f n o t u s i n g T E a s t h e m a i n s u b c o n tr a c to r. A n d w e w il l s e e t h e r e th a t b i d d e r 1 n o w h a s a n a d v a n t a g e
in i t s p r ic e e v a lu a ti o n o f 1 . 9 m il li o n p e r l o c o m o tiv e w h e r e i t is
s u b tr a c te d fr o m th e fi g u r e a b o v e .
A D V M A H L A P E S E L L O : Ye s .
CHAIRPERSON : I think – I think you have lost me.
M R F R A N C I S Q U E N T I N C A L LA R D : I a m s o r r y M r C h a ir.
C H A I R P E R S O N : A r e y o u o n t h e s u p p l e m e n ta r y a ff id a v i t?
MR FRANCIS QUENTIN CALLARD:

20

S u p p l e m e n ta r y a ffi d a v i t t h e le f t

hand column bidder 1.
A D V M A H L A P E S E L L O : P a g e 2 3 t h a t l e g i b l e c o p y C h a ir.
C H A I R P E R S O N : O h o k a y.
ADV MAHLAPE SELL O : And page 23.
C H A I R P E R S O N : O k a y. O k a y. O k a y t h a n k y o u .
A D V M A H L A P E S E L L O : A n d y o u s ta r t e d fr o m t h e b o t t o m a n d y o u s a y

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20 MAY 2019 – DAY 96
w e s h o u l d l o o k a t t h e b o t t o m o f t h a t t a b l e t h ir d r o w fr o m t h e b o t to m .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : S u b t o ta l 3 t o t a l p r ic e b e fo r e T E a d ju s t m e n ts .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : O k a y th e n y o u c a n t a k e i t fr o m t h e r e p l e a s e .
MR FRANCIS QUENTIN CALLARD:

I f w e l o o k a t th e f ir s t c o lu m n

b i d d e r 1 i t i s 3 4 . 7 m i ll io n r o u n d e d .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : W e t h e n h a v e t h e n e x t li n e w h ic h
10

r e a d s t h e i m p a c t o f n o t u s in g T E a s t h e m a in s u b - c o n t r a c t o r.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D :

A n d in t h e r e w e n o w h a v e m i n u s

1 .9 m i ll i o n r o u n d e d . W e t h e n h a v e a li n e w h ic h is c a ll e d p r ic e u s e d f o r
e v a l u a t i o n w h ic h i s n o w 3 2 .8 m i ll io n r o u n d e d .
ADV MAHLAPE SELLO:

S o t h a t p r ic e – t h a t p r ic e f o r i m p a c t f o r n o t

u s i n g T E is s u b t r a c t e d fr o m t h e o r i g i n a l b i d p r ic e ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : To g e t a n e w p r i c e .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
20

A D V M A H L A P E S E L L O : E v a l u a ti o n . O k a y.
M R FR A N C I S Q U E N T I N C A L L A R D : A s i m i la r p r o c e s s f o l lo w s i n c o l u m n
2
A D V M A H L A P E S E L L O : A n d th a t is f o r C S R n o w ?
MR FRANCIS QU ENTIN CALLARD:

Just for CSR.

b e f o r e T E a d j u s t m e n t is 3 8 m i ll io n r o u n d e d .

Page 165 of 247

W i t h a to t a l p r ic e

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO: Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : S u b t r a c t 3 . 4 8 m i ll i o n .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : G iv in g a n e w p r ic e o f 3 4 . 7 m il li o n
r o u n d e d . Th e i m p o r ta n t p a r t I w is h t o h i g h l ig h t h e r e is t h a t t h i s i s n o w
a p r ic e u s e d fo r e v a l u a ti o n a n d i t w i ll s e e m to b e c a r r i e d f o r w a r d i n
s u b s e q u e n t d o c u m e n ts a n d c o n v e y e d f u r th e r i n to th e o r g a n is a ti o n
w h ic h I u s e t h is t o il lu s t r a t e t h e p o i n t w h ic h I m a k e o n 1 6 9 .8 m y
s t a te m e n t .
10

A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD :

S ti ll o n p a g e 4 0 c o m p a r i n g l in e s

s u b to t a l 3 to t a l p r ic e b e fo r e T E a d ju s t m e n t w i t h p r ic e u s e d fo r
evaluation shows how the impact of not using TE as a main subc o n tr a c to r f a v o u r s b id d e r 1 B o m b a r d i e r a n d 2 C S R a s t h e s e p r ic e s a r e
t a k e n f o r w a r d a n d a s s t a t e d h e r e p r i c e s u s e d f o r e v a lu a ti o n . I t a k e th is
f o r w a r d to m y e a r l i e r p o i n t w h e r e I a r g u e d t h a t T E w a s n o t a p r e s c r ib e d
s u b - c o n t r a c t o r a n d I c o n te n d th a t i t w a s t h e r e f o r e i n c o r r e c t a n d fl a w e d
t o b r i n g T E i n f o r e v a lu a ti o n p r o c e s s e s w h e n t h e y w e r e n o t a s a b a n d
r e tr i e v e r a s t o b r i n g T E i n fo r e v a lu a t io n w h e n th e y w e r e n o t a
20

p r e s c r i b e d s u b - c o n tr a c t o r.
C H A I R P E R S O N : I t h i n k y o u s a id e a r l i e r o n t h a t i t w a s o n ly s o m e a n d
a l l t h e b i d d e r s w h o w e r e a s k e d t o r e v is e t h e ir b i d s a n d t o i n d ic a t e w h a t
t h e ir p r ic in g w o u l d b e i f t h e y d i d n o t u s e T E a s a s u b - c o n tr a c to r, i s t h a t
r ig h t ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .

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20 MAY 2019 – DAY 96
C H A I R P E R S O N : Ye s . S o n o t a ll – n o t a ll o f t h e m – n o t a ll th e b id d e r s
had said they would use TE as a sub -contractor?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
C H A I R P E R S O N : N o w i f 3 h a d p u t i n t h e ir p r ic in g o n th e b a s is o f u s i n g
T E a s a s u b - c o n tr a c to r a r e y o u s u g g e s ti n g t h a t m a y b e o n ly tw o i n s t e a d
o f t h r e e w e r e a s k e d to r e v is e o r a r e y o u – w h e n y o u s a y n o t a l l o r s o m e
o r a r e y o u s i m p ly s a y in g a ll th o s e t h a t h a d u s e d T E a s – h a d i n c lu d e d
T E a s a s u b - c o n tr a c t o r w e r e a s k e d t o r e v is e ?
MR FRANCIS QUENTIN CALLARD :
10

O n t h e E l e c – o n t h e e le c t r ic

lo c o m o t iv e s th o s e w h o i n d ic a t e d t h a t th e y h a d u s e d T E a s a s u b c o n tr a c to r w e r e a s k e d t o r e v is e .
C H A I R P E R S O N : W i t h o u t e x c e p t io n a l l o f t h e m t h o s e ?
MR FRANCIS QUENTIN CALLARD:

W i t h o u t e x c e p ti o n o n t h e e l e c tr ic

s id e .
C H A I R P E R S O N : Ye s , y e s .
M R F R A N C I S Q U E N T I N C A L L A R D : T h e n e tt r e s u l t t o t h a t i f I m a y c a l l
it b i d d e r 5 s a i d w h e t h e r w e u s e T E o r d o n o t u s e T E n o c h a n g e .
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : B i d d e r s 1 a n d 2 s a id i f w e d o n o t
20

h a v e t o u s e T E w e c a n r e d u c e o u r p r i c e s a s I h a v e in d i c a t e d h e r e .
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : T h e i m p a c t o f t h a t o n b i d d e r s 3 ,5
a n d 7 i f I m a y t a k e y o u p le a s e t o t h e s u p p l e m e n t a r y 2 3 a g a i n .

To ta l

p r i c e b e f o r e i m p a c t o f T E a d j u s t m e n t a n d w e g o d o w n t o t h e p r ic e u s e d
f o r e v a lu a ti o n t h e r e is n o c h a n g e f o r b id d e r s 3 , 5 a n d 7 in t h e p r i c e

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20 MAY 2019 – DAY 96
u s e d f o r e v a lu a ti o n . W h e r e a s f o r b i d d e r s 1 a n d 2 m a y I r e p e a t ? T h e r e
is a s i g n i fi c a n t c h a n g e i n th e p r ic e u s e d f o r e v a l u a t io n b e c a u s e o f th is
i m p a c t t h a t t h e y h a v e s a i d – b e c a u s e t h e i m p a c t o f u s in g T E a s a s u b c o n tr a c to r.
CHAIRPERSON:

B u t y o u w o u ld – y o u a c c e p t – d o y o u a c c e p t t h a t

w h e r e o u t o f fo r a r g u m e n t s a k e 6 b i d d e r s 3 h a d p r e p a r e d t h e ir b i d s o n
t h e b a s is o f u s in g T E a s a c o n tr a c t o r – a s a s u b - c o n t r a c t o r w h e r e a s th e
o th e r t h r e e h a d n o t u s e d T E a s a s u b - c o n tr a c to r. I f a l l t h e t h r e e w h o
h a d u s e d T E a s a s u b - c o n tr a c t o r i n p r e p a r i n g t h e ir b i d – th e i r b i d s if a l l
10

t h o s e t h r e e w e r e a s k e d t o r e v is e t h e ir b i d s o n t h e b a s is t h a t t h e y w e r e
n o t g o i n g t o u s e T E t h e n a f t e r t h e y h a d r e v i s e d t h e ir p r ic e s b a s e d o n
t h a t t h a t o n i ts o w n d i d n o t r e s u l t i n a n y u n f a i r n e s s to a n y o f t h e – t o
t h e b i d d e r s w h o h a d n o t u s e d T E a s a s u b - c o n tr a c to r i n p r e p a r i n g t h e i r
bids.
M R F R A N C I S Q U E N T I N C A L L A R D : I m a k e t h e p o i n t [i n d i s t i n c t ] C h a ir
t h a t a n d I h o l d I d o n o t k n o w w h e th e r i t w o u l d h a v e m a d e a d i ff e r e n c e
o r n o t . I c a n n o t s a y w h e t h e r i t w o u l d h a v e m a d e a d i ff e r e n c e o r n o t.
T h e p o in t I w i s h to h i g h li g h t t h a t i t w a s a n in c o r r e c t p r i n c i p l e t h a t w a s
b e i n g u s e d f o r p r ic e e v a l u a t io n . W h e th e r it m a y o r m a y n o t h a v e m a d e

20

a d i ff e r e n c e is a p o i n t I t h i n k f o r f u r t h e r e v a l u a ti o n a n d e x a m i n a t io n in
t e r m s o f a ll t h e c r i t e r i a . I t h i n k fr o m a f ir s t p o in t g l a n c e a t t h e p r ic in g I
c o u l d t a k e a n d I r e fe r t o p a g e 2 3 o f t h e s u p p le m e n t a r y t h a t b id d e r 7 ’s
r e m a in e d t h e s a m e 3 3 . 6 m i ll io n to 3 3 . 7 m i ll io n r e m a i n e d a t 3 3 . 7 .
B i d d e r 8 – s o r r y b i d d e r 2 w h i c h b e f o r e t h e a d ju s t m e n t w a s a t 3 8 . 2
m il li o n r o u n d e d t a k i n g t h a t a d ju s t m e n t n o w c o m e s d o w n t o 3 4 .7 a n d

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20 MAY 2019 – DAY 96
b i d d e r 1 c o m e s fr o m 3 4 . 7 a ft e r t h a t a d j u s t m e n t t o 3 2 m a k in g i t t h e
lo w e s t s o in t h e p r i c e e v a lu a ti o n – p r ic e u s e d f o r e v a lu a ti o n i t b r i n g s
them below other bidders who did not use TE.
C H A I R P E R S O N : Ye s w e l l I m a y b e m i s s i n g s o m e t h in g . I a m j u s t t r y i n g
t o u n d e r s t a n d b e c a u s e i t s e e m s to m e o n t h e f a c e o f it t h a t th e r e q u e s t
t o i n m y e x a m p le t o y o u t o t h e th r e e w h o h a d p r e v io u s ly u s e d T E a s a
s u b - c o n t r a c t o r in g iv i n g t h e ir p r ic e s t h e r e q u e s t t h a t th e y s h o u l d r e v is e
t h e ir b i d s o r p r ic e s a n d p u t in p r ic e s b a s e d o n n o t u s i n g T E a s a s u b c o n tr a c to r i t s e e m s t o m e o n th e f a c e o f it th a t it i s s o m e t h i n g t h a t i t
10

s e e k i n g t o p u t a l l o f t h e m o n t h e s a m e l e v e l . A l l t h e s ix i n m y e x a m p l e
– all the six bidders because the – what has happened is bidders have
p u t i n th e ir b id s o n d i ff e r e n t u n d e r s t a n d i n g .

Some have put it on the

b a s is o f u s in g T E a s a s u b - c o n tr a c to r o th e r s h a v e p u t i n t h e ir b id s o n
t h e b a s is o f n o t u s i n g T E a n d t h a t m e a n s i t s e e m s o r t o m e o n th e f a c e
o f i t th a t i t m e a n s t h e s e b i d d e r s a r e n o t c o m p e ti n g o n th e s a m e b a s i s
b e c a u s e t h e r e is th is s i tu a ti o n t h a t t h e o n e s h a v e i n c l u d e d T E a s a s u b c o n tr a c to r b e c a u s e m a y b e t h e y u n d e r s t o o d t h a t i t is p r e s c r i b e d b u t I
r e m e m b e r y o u r e x a m p l e a b o u t c o m e t o t h e m e e ti n g w i t h o u t t e l li n g y o u
t h e d a t e . B u t t h e y h a v e in c l u d e d it b u t o t h e r s h a v e t a k e n t h e v i e w th a t
20

lo o k b e c a u s e w e w e r e n o t g iv e n t h e d e t a il s i t m e a n s w e c a n r e g a r d T E
a s n o t p r e s c r i b e d t h e r e f o r e w e w il l u s e o t h e r s u b - c o n tr a c t o r s o r
a l t e r n a t iv e s . S o I a m tr y in g t o g e t w h e t h e r t h e r e is a p o i n t y o u s e e k to
m a k e w h e r e – w i t h r e g a r d t o t h e fa c t th a t p r i c e s w e r e r e v is e d b y t h o s e
t h a t h a d u s e d T E a s a s u b - c o n t r a c to r i n t e r ms o f p r ic in g . A n d I w a n t t o
u n d e r s t a n d t h a t p o i n t i f t h e r e is a p o i n t y o u s e e k t o m a k e ?

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L L A R D : T h e r e i s a p o in t Mr C h a ir. I t is n o t
t h a t th e p r i c e s w e r e r e v i s e d .
CHAIRPERSON : Ja.
MR FRANCIS QUENTIN CALLARD:

Yo u a r e a b s o l u te ly c o r r e c t t h a t

t h e y s o u g h t t o n o r m a li s e t h e p r ic e s b y e x c l u d i n g T E .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D :

T h e p o in t I m a k e i s b e c a u s e T E

w a s n o t a p r e s c r i b e d s u b - c o n t r a c t o r in t h e b i d p r o c e s s .
CHAIRPERSON : Hm.
10

M R F R A N C I S Q U E N T I N C A L L A R D : To n o r ma li s e i t o n t h i s b a s is o f n o t
u s i n g T E w a s a fl a w e d p r o c e s s b e c a u s e t h e e v a lu a ti o n is n o w d o n e o n
a p r ic e d i ff e r e n c e b e t w e e n u s i n g T E a n d n o t u s i n g T E . A s I s a id …
CHAIRPERSON :

T h a t is b e f o r e – th a t i s b e f o r e t h e r e v i s i o n o f t h e

p r i c e s i n r e g a r d t o th o s e w h o h a d – w h o h a d t h e y w o u l d u s e T E ?

I

u n d e r s t a n d th e l a s t p o in t th a t y o u h a v e m a d e I u n d e r s t a n d it i n s o f a r a s
y o u a r e a p p l ie d t o th e s i tu a ti o n b e f o r e s o m e a r e r e q u e s t e d t o r e v is e
t h e ir p r ic e s . I u n d e r s ta n d i t th e r e .
M R F R A N C I S Q U E N T I N C A L LA R D : J a .
C H A I R P E R S O N : B u t t o t h e e x t e n t t h a t y o u m a y b e m e a n in g to a p p ly i t
20

t o e v e n a f t e r t h a t is w h e r e – a f t e r t h e y h a v e r e v is e d t h e i r p r i c i n g t h a t is
w h e r e I a m t r y i n g t o g e t c l a r i ty.
M R F R A N C I S Q U E N T I N C A L LA R D : O k a y.
A D V M A H L A P E S E L L O : C h a ir w i t h y o u r p e r m is s i o n if I m a y ?
C H A I R P E R S O N : Ye s , y e s .
ADV MAHLAPE SELL O : May I pose a couple of questions.

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20 MAY 2019 – DAY 96
C H A I R P E R S O N : Ye s .
ADV MAHLAPE SELLO:

To M r C a ll a r d p e r h a p s i t m i g h t a s s i s t i n u s

[i n d is t in c t] q u e s ti o n .
C H A I R P E R S O N : T h a t m ig h t h e lp ja .
ADV MAHLAPE SELLO:

L e t u s g o b a c k t o th e b i d d o c u m e n t a ti o n M r

C a ll a r d .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : To t h e b e s t o f y o u r k n o w l e d g e w a s t h e u s e o f
T E a s a s u b - c o n t r a c t o r p r o v i d e d f o r d i r e c tl y a s a li n e it e m w i t h a
10

s p e c i f ic c o s t to i t b y t h e b id d e r s ?
M R F R A N C I S Q U E N T I N C A L LA R D : N o .
A D V M A H L A P E S E L L O : S o t h e b id j u s t in d ic a t e d t h a t i t h a s t a k e n i n to
c o n s i d e r a ti o n u s i n g T E a s a s u b - c o n t r a c t o r ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h e b id s a r e i n f a c t s i l e n t o n t h a t
a s a li n e i te m . I n a d d i ti o n i n a d o c u m e n ta t io n t h a t a c c o m p a n ie s t h e b i d
t h e y in d i c a t e w h e t h e r t h e y w o u l d o r w o u l d n o t h a v e u s e d T E a s a
s u b c o n tr a c t o r.
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .

20

ADV MAHLAPE SELLO:

S o w h e n th e r e q u e s t is m a d e t o i n d ic a te t h e

i m p a c t o f n o t u s i n g T E a s a s u b c o n tr a c t o r Tr a n s n e t d o e s n o t k n o w w h a t
p e r c e n t a g e o f th e t o t a l p r ic e t o e x p e c t t o b e d e d u c t e d b e c a u s e i t w a s
n o t s t a te d u p fr o n t w h a t t h a t c o s t is ?
M R F R A N C I S Q U E N T I N C A L LA R D : N o , n o .
ADV MAHLAPE SELLO:

A n d m y s e c o n d q u e s ti o n t h e n i s B o m b a d i e r

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20 MAY 2019 – DAY 96
s a i d i t w o u l d r e d u c e t h e ir p r ic e b y 1 .9 m il li o n .

C S R s a id i t w o u l d

r e d u c e t h e ir p r i c e b y 3 . 4 m il li o n .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : W e r e t h o s e to f i g u r e s v e r i fi a b l e i n d e p e n d e n t ly
b y Tr a n s n e t ? C o u l d Tr a n s n e t d e t e r m i n e t h a t i f C S R d o e s n o t u s e T E I
s e e h o w t h e ir p r ic e w il l r e d u c e t o 3 . 4 m il li o n – b y 3 . 4 m il li o n ?
M R F R A N C I S Q U E N T I N C A L LA R D :

Th o s e p r ic e s w e r e t o th e b e s t o f

m y k n o w le d g e n o t v e r if i a b le . I t is – i t w a s a l m o s t t h e s a m e a s I h a v e a
q u o t e fr o m A , I h a v e a q u o t e fr o m B .
10

Te ll m e th e d i ff e r e n c e b e t w e e n

q u o t e A a n d B b u t I a s k t h a t – I g iv e y o u a n a n s w e r b u t y o u d o n o t
v e r i fy t h a t b y g o i n g t o A a n d / o r B t o v e r i f y t h a t .
ADV MAHLAPE SELLO: So …
M R F R A N C I S Q U E N T I N C A L LA R D :

S o I c o u l d h a v e g iv e n y o u a n y

fi g u r e a s a d i ff e r e n c e b e t w e e n p r i c e A a n d B .
ADV MAHLAPE SELLO:

S o Tr a n s n e t d i d n o t h a v e t h e a c t u a l q u o t e

fr o m – f r o m T E t o B o m b a d ie r i f e v e r t h e r e w a s o n e o r t o C S R ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h e …
ADV MAHLAPE SELLO:

W h a t T E s a y s it w o u l d c h a r g e f o r b e i n g a

s u b c o n tr a c t o r o n t h i s a c q u i s i ti o n ?
20

M R F R A N C I S Q U E N T I N C A L LA R D : Th e y c e r t a i n l y s h o u l d n o t h a v e h a d
t h a t b e c a u s e i n th a t – th e y s h o u l d n o t h a v e h a d t h a t – n o th e y s h o u l d
not have had that.
A D V M A H L A P E S E L L O : S o a r e y o u s u g g e s ti n g t h e n t o t h e C h a ir t h a t
t h o s e fi g u r e s p r o v i d e d b y C S R a n d B o m b a d i e r r e s p e c tiv e ly – f o r l a c k o f
a b e t te r d e s c r i p ti o n – a r e a r b i tr a r ily ?

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D :

T h a t i s – t h e y a r e a r b i tr a r y a n d

u n v e r i fi a b l e . I k n o w o f n o w a y w h ic h t h e y c o u l d b e v e r if i e d .
ADV MAHLAPE SELLO:

A n d y e t t h e y a r e a p p l ie d to t h e b i d p r ic e to

reduce that price …
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : F o r e v a l u a ti o n p u r p o s e s ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

A n d th a t – t h a t th e n g a i n e d C S R i n th is

in s t a n c e w h i c h h a s g o t t h e b ig g e s t r e d u c ti o n o f 3 . 4 a s ig n i f ic a n t
10

advantage.

Where as it was higher than bidder seven when it

in tr o d u c e s w h a t it s a y s is a D E i m p a c t c o s t i t r e d u c e s to a l m o s t – n o t
b e l o w – b u t s a m e l e v e l a s b id d e r s e v e n w h o w a s b y t h e n t h e c h e a p e s t
bidder?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : N o w t h e q u e s ti o n is in t h a t p r o c e s s is t h e r e a
p a r t ic u l a r a d v a n t a g e t h a t i s t h e n s u ff e r e d b y b i d d e r s e v e n ?
M R F R A N C I S Q U E N T I N C A L LA R D :

Well

s ig n if ic a n t ly

–

th e r e

is

d e f in i te ly a d i s a d v a n ta g e s u ff e r e d b y b i d d e r s e v e n a n d a l l th e o th e r
b i d d e r s i n t h a t b a s is b e c a u s e t h e p r ic e – a n d I t a k e it t o t h e b o t to m l i n e
20

– th e p r i c e u s e d fo r e v a lu a ti o n th e y a r e t h e n e v a l u a te d – b i d d e r s e v e n
w h o d id n o t u s e T E is e v a l u a t e d a g a in s t a n o t h e r b i d d e r w h o u s e d T E
w i t h t h i s a r b i tr a r y d is c o u n t a n d w h o m a y t h e n c o m e in t o a l o w e r p r ic e .
S o i f I a m e v a l u a t in g o n p r ic e a n d th e n I w o u l d c h o o s e a n d I a m
c h o o s i n g th e lo w e r p r ic e a n d i t h a s a p e r c e n ta g e w a g i n g in t o t h e f i n a l
e v a l u a t i o n . I w o u ld b e a d v a n t a g e d b y t h e f a c t o f m y lo w e r p r ic e t h a t is

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20 MAY 2019 – DAY 96
u s e d fo r e v a l u a t io n . S o t h e p o in t I a m m a k in g h e r e I a m a d v a n t a g e d b y
t h is lo w e r p r ic e b e c a u s e o f w h a te v e r a r b itr a r y n o n - v e r i f ia b le – t o th e
b e s t o f m y k n o w l e d g e – n o n - v e r i fi a b l e d e d u c t io n t h a t I h a v e p la n n e d
through the use of TE.

If t h e d e d u c t io n h a d b e e n v e r i fi a b l e a n d /o r

q u a n ti fi a b l e i n o th e r te r m s h e r e i t m i g h t h a v e b e e n a d i ffe r e n t s t o r y b u t
it is a n u n v e r i fi a b l e , u n q u a n t if i a b le a n d T E w a s n o t p r e s c r i b e d a s t h e
u s e o f a s u b c o n tr a c t o r. S o th e p o in t I a m r e a ll y – I w i s h t o m a k e h e r e
is th a t w e a r e e v a l u a t in g t h e p r ic e u s i n g a c o n d it i o n w h ic h w a s n o t in
t h e b i d d o c u m e n ts .
10

C H A I R P E R S O N : B u t i n th e e n d t h e e v a l u a ti o n is n o t – is n o t m a d e o n
t h e b a s is o f a fa c to r t h a t w a s n o t s u p p o s e d t o b e t a k e n i n to a c c o u n t .
T h e f a c t o r th a t w a s n o t s u p p o s e d to b e ta k e n i n t o a c c o u n t is w h a t
h a p p e n s i f y o u – w a s y o u m u s t u s e T E a s a s u b c o n tr a c t o r - a s I
u n d e r s t a n d y o u r e v i d e n c e . T h e – th e – Tr a n s n e t w a s n o t s u p p o s e d t o
m a k e a n e v a l u a ti o n m a d e o n t h e b a s i s t h a t a b i d d e r w a s o b li g e d to u s e
T E a s a s u b c o n tr a c t o r, o k a y ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
C H A I R P E R S O N : N o w s o m e p u t i n b id s w h ic h i n c lu d e d th a t – T E a s a
s u b c o n tr a c t o r ?

20

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : O th e r s d id n o t in c l u d e T E a s a s u b c o n tr a c t o r ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
CHAIRPERSON :

N o w h o w w o u ld – h o w d o y o u r e c t i fy th is ?

Le t us

s u p p o s e t h a t y o u r e a l is e a t Tr a n s n e t th a t a m is t a k e w a s d o n e b e c a u s e
in f o r m a ti o n w a s s e n t t o b i d d e r s w h ic h s u g g e s te d m a y b e t h a t T E s h o u l d

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20 MAY 2019 – DAY 96
b e t a k in g i n t o a c c o u n t o r w o u l d b e u s e d th e r e b u t j u s t m o r e i n fo r m a ti o n
w a s n o t s e n t o r y o u j u s t r e a li s e t h a t d u e t o m a y b e s o m e m i s ta k e o n t h e
p a r t o f Tr a n s n e t a n d o n e o r a n o t h e r s o m e b i d d e r s m a y h a v e b e e n
m is le d i n t o t h i n k in g th e y h a v e t o u s e T E a s a s u b c o n tr a c to r. Yo u w a n t
t o r e c ti fy t h is . S e e i t s e e m s t o b e t h e e a s ie s t t h i n g t o d o t o s a y m a y b e
r a th e r th a n s t a r t t h e w h o l e t h i n g a fr e s h l e t u s s a y t h i s f a c to r w h ic h t h e y
s h o u l d n o t h a v e p u t in s h o u l d n o t b e p u t in a n d l e t u s t h e n e v a l u a te
e v e r y b o d y o n th e b a s is o f n o t u s in g T E a s a s u b c o n tr a c t o r. O f c o u r s e
w h e n t h e y t a k e T E – th e T E f a c t o r o u t t h e y mi g h t p u t a n a l t e r n a ti v e a n d
10

t h e n r e v is e t h e ir p r ic e o n t h a t b a s is . N o w o n t h e f a c e o f i t t h a t d o e s
n o t a p p e a r t o m e t o b e s o m e t h in g u n f a ir b u t i t m a y b e th a t i t is . I a m
ju s t n o t s e e i n g t h e p o in t y o u – y o u a r e m a k in g .
M R F R A N C I S Q U E N T I N C A L LA R D : C o u l d I p e r h a p s tr y t h e f li p s id e o f
t h e c o in M r C h a ir ?
CHAIRPERSON : Ja, hm.
M R F R A N C I S Q U E N T I N C A L LA R D :

Th e b a s is fo r e v a l u a ti o n o f t h e

bids …
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D :
20

Should

be

for

a

purpose

or

tr a n s p a r e n c y a n d f a ir n e s s .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : S h o u l d b e c l e a r ly s t a te d i n t h e b i d
d o c u m e n ts .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t w e a l l k n o w t h e le v e l p l a y i n g

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20 MAY 2019 – DAY 96
fi e l d …
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : W e a r e p la y i n g o n .
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

I f t h e b i d d o c u m e n ts s ta t e d t h a t

t h e r o le o f T E w ill b e p r e s c r i b e d a n d th a t d o c u m e n t a ti o n b e i n y o u w il l
u s e T E fo r a s s e m b ly o f t h e lo c o m o t iv e s . L e t m e u s e t h a t a s a s i m p le
e x a m p l e – f o r t h e a s s e m b ly o f t h e lo c o m o t iv e s . Th e n e v e r y b o d y w o u ld
k n o w t h a t a n d e v e r y b o d y w o u l d in c l u d e a p r ic e fr o m T E f o r th a t . W h a t I
10

a m p u t ti n g fo r w a r d h e r e i s t h a t t h a t c o n d it i o n w a s n o t i n t h e b id
d o c u m e n ts – b e c a u s e i t i s n o t i n th e b i d d o c u m e n ts i t is u n r e a s o n a b le
t o p u t th a t c o n d it i o n in a f te r t h e b i d s h a v e c lo s e d , a f t e r t h e t e n d e r s
h a v e s u b m i t t e d th e ir c o n d i ti o n s a n d e v a l u a te t h e m o n t h a t b i d w i t h o u t
t e ll i n g a ll th e b i d d e r s th a t t h is g o i n g t o b e h o w t h e y a r e g o i n g t o b e
evaluated.

W e f in d n o c o r r e s p o n d e n c e t o s a y th a t t h i s is h o w t h e

b i d d e r s a r e g o i n g to b e e v a l u a te d .

S o t h e e v a l u a t io n p r o c e s s w h ic h

w a s s e t o u t i n t h e b i d d o c u m e n ts o f w h a t t h e te n d e r e r s h a d t o c o m p ly
t o – s o r r y – t h e y a r e e v a lu a t in g t h e b id d e r s o n c o n d i ti o n s d i ffe r e n t t o
t h a t w h ic h w a s in t h e b id d o c u m e n t s a n d t h a t is th e …
20

CHAIRPERSON :

O k a y. W e w il l m o v e o n ju s t n o w s o t h a t w e a r e n o t

d e t a i n e d o n th is is s u e . Yo u a d v e r ti s e a p o s i ti o n f o r a j o b a n d y o u s a y a
B a c h e l o r ’s D e g r e e is r e q u ir e d – is a n e s s e n ti a l …
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
CHAIRPERSON : And you say well if you have got an Hono urs Degree
o r e v e n a M a s t e r s th a t w il l b e a r e c o m m e n d a ti o n b u t i t is n o t e s s e n ti a l

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20 MAY 2019 – DAY 96
…
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
CHAIRPERSON :

B u t a c t u a l ly th e i d e a w a s fr o m w h o e v e r y o u r

s u p e r i o r s w e r e w e w il l e v a l u a te o n th e b a s i s o f a B a c h e l o r ’s D e g r e e
o n ly. I f y o u h a v e s e e n a n y th i n g h ig h e r w e w i ll n o t g i v e i t a n y p o i n ts ,
o k a y.

S o y o u – y o u r e a l is e t h a t n o w o k a y t h a t is th e p o s i ti o n p e o p l e

h a v e a p p li e d b u t t h e y a r e u n d e r t h e i m p r e s s i o n t h a t i f t h e y h a v e
s o m e t h i n g m o r e t h a n a B a c h e lo r ’s D e g r e e t h a t w i ll c o u n t – t h a t m a y
c o u n t f o r s o m e th i n g . S o y o u t h e n s a y w e l l m a y b e t h e r e w a s a m i s t a k e .
10

W e j u s t w a n t t o t e l l e v e r y b o d y t h a t a c t u a lly w e w il l n o t ta k e in t o
a c c o u n t a n y th i n g a b o v e a B a c h e l o r ’s D e g r e e .
everybody then knows that.

Then you make sure

I f t h e y a r e h a p p y to c o n ti n u e a n d th e –

t h e ir c a n d id a c y is e v a l u a t e d o n t h e b a s is o f a B a c h e l o r ’s D e g r e e o n ly i t
d o e s n o t a p p e a r t o m e t h a t t h e r e is u n f a ir n e s s o n t h o s e w h o h a d o n l y a
B a c h e l o r ’s D e g r e e th a t t h o s e w h o h a v e s o m e t h i n g h i g h e r t h a t is n o t
t a k e n i n to a c c o u n t a n y m o r e . I t j u s t s e e m s th a t i t is t h e n fi n e b e c a u s e
y o u . Yo u m a k e s u r e t h a t t h e y k n o w t h is w i ll n o t b e t a k e n in t o a c c o u n t
a n y th in g h ig h e r b e c a u s e if y o u d o n o t t e ll t h e m a n d y o u e v a lu a te h e m
o n t h e b a s i s o f a B a c h e l o r ’s D e g r e e o n ly t h e y – t h e y w i ll b e e n t i tl e d to
20

s a y b u t y o u t o l d u s i t w o u ld b e a r e c o m m e n d a ti o n i f I h a v e g o t a n
H o n o u r s D e g r e e a n d n o w y o u d i d n o t g iv e m e a n y p o in ts f o r m y
H o n o u r s a n d m y M a s te r s .
M R F R A N C I S Q U E N T I N C A L LA R D :

M a y I – u s in g t h o s e e x a m p le

M r C h a ir ?
CHAIRPERSON : Ja.

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : A n d ju s t t u r n i n g it t h e w a y a r o u n d .
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D :
for

B a c h e lo r ’s

Degree

and

W e a d v e r ti s e d t h e p o s it i o n s a y in g

s a y in g

Masters

and

Honours

are

a

r e c o m m e n d a ti o n .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D :

B u t in t h e – s o w e g e t s o m e

a p p lic a ti o n s w h ic h h a v e B a c h e l o r ’s D e g r e e …
CHAIRPERSON : Hm.
10

M R F R A N C I S Q U E N T I N C A L LA R D : A n d s o m e a p p l ic a ti o n s w h ic h h a v e
Honours and Masters.
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : In t h e e v a l u a t io n p r o c e s s …
CHAIRPERSON: Hm.
M R F R A N C I S Q U E N T I N C A L LA R D :

W e c h a n g e o u r m in d a n d w e s a y

w e a r e o n ly g o in g to e v a l u a te if y o u h a v e a n H o n o u r s o r M a s t e r s …
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : A n d w e a r e n o t g o in g to t e l l t h o s e
w h o h a v e a B a c h e l o r ’s D e g r e e .
20

CHAIRPER SON: That – that I understand. I see …
M R F R A N C I S Q U E N T I N C A L LA R D : A n d t h a t is …
CHAIRPERSON :

Te ll m e h o w – h o w t h a t a p p li e s h e r e b e c a u s e t h a t –

t h a t i s – ju s t t e l l m e h o w t h a t a p p l ie s t o th i s s i tu a ti o n .
M R F R A N C I S Q U E N T I N C A L LA R D : I n t h e f ir s t – w e ll – w e a d v e r ti s e a
bid …

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20 MAY 2019 – DAY 96
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D :

It does not say – it does not

prescribe the use of TE.
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : I tr i e d to d e m o n s tr a te . I t d o e s n o t
prescribe the use of TE.
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : W e t h e n c o m e t o e v a lu a t e t h e b id s
a n d w e s a y a n d w e a r e n o w e v a l u a t in g th e b id s o n th e b a s is t h a t th e y
10

s h o u l d h a v e u s e d T E w h ic h i s w h a t w h e n w e c o m e to t h is – t h is p r ic e
used for evaluation.

W e a r e u s i n g e v a l u a ti n g t h e m o n t h e b a s is th a t

t h e y s h o u ld h a v e u s e d T E . W e d o n o t t e ll e v e r y b o d y e ls e t h a t t h is is
t h e r e v is e d b a s i s o f e v a l u a t i o n .
CHAIRPERSON :

O k a y.

M a y b e I h a v e m is u n d e r s t o o d s o m e t h i n g .

I

t h o u g h t t h a t a f t e r s o m e w h e r e th o s e w h o h a d u s e d T E – w h o h a d
f a c to r e d i n T E f o r t h e – fo r – i n th e ir b id s a n d t h e y w e r e a s k e d t o r e v i s e
t h e ir b i d s in – o n th e b a s i s o f n o t u s i n g T E . I t h o u g h t th a t - t h a t m e a n t
t h a t t h e e v a l u a t io n w o u l d h a v e n o p l a c e f o r T E i n t h e s e n s e th a t t h e
f a c t th a t y o u u s e d T E o r n o t u s e T E o r r a t h e r t h a t e v e r y b o d y w o u l d b e
20

e v a l u a t e d o n th e b a s is o f n o t u s i n g T E .
M R F R A N C I S Q U E N T I N C A L LA R D :

Th a t is – t h a t i s t h e s u b tl e ty o f

t h is . Th e y d o b r in g t h a t i n a s e v e r y b o d y is e v a l u a te d o n th e b a s i s o f
n o t u s i n g T E . T h e i r p o i n t – i m p a c t o f n o t u s i n g T E a s a s u b c o n tr a c t o r.
T h e d i ffic u lt y i n t h is is t h a t w h e n I w a s a s k e d h o w – b y h o w m u c h w o u ld
m y p r ic e r e d u c e i f I d i d n o t u s e T E a n d s a i d I c o u l d u s e a n a r b i tr a r y

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20 MAY 2019 – DAY 96
fi g u r e t o g iv e t o y o u fo r y o u r e v a l u a t io n .

H e r e is n o w a y I w il l b e

e v a l u a t i n g t h is 3 . 4 8 m i lli o n o r 1 . 9 0 5 a n d …
CHAIRPERSON :

B u t y o u s e e th e a r b i t r a r in e s s o f th e fi g u r e is a

d i ff e r e n t p o i n t a s I s e e .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : B u t I t h i n k le t u s – le t u s m o v e o n . It is o k a y.
A D V M A H L A P E S E L L O : O k a y C h a ir. I a m h a p p y t o m o v e o n . P e r h a p s
s o m e h o w w e w il l g e t b a c k t o th is p o in t in a d i ff e r e n t m a n n e r.
M R F R A N C I S Q U E N T I N C A L LA R D : I h o p e i t w i ll c o m e u p .
10

A D V M A H L A P E S E L L O : Ye s b e c a u s e w e a r e n o w a t e v a l u a t io n s t a g e .
W e k n o w B o m b a d ie r a n d C S R i n t e n d t o u s e T E .

The question

M r C a l l a r d I w il l p o s e is t h a t f ig u r e o f 3 . 4 m il li o n r e p r e s e n t i n g i m p a c t o f
using TE by CSR.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

D o e s i t m a k e i t s – i t s w a y in a n y f o r m o r

s h a p e b a c k to t h e p r ic e o f th e l o c o m o t iv e w h e n w e p r o g r e s s ?
M R F R A N C I S Q U E N T I N C A L LA R D :

Ye s , it d o e s .

I n th e la t e r p a r t a t

t h e e n d o f t h e n e g o t i a t i o n s w e w il l s e e t h a t t h a t 3 . 4 m il li o n i s a d d e d
b a c k i n t o t h e p r ic e . S o …
20

ADV MAHLAPE SELLO:

S o w e a r e g e t ti n g b a c k t o t h e a c t u a l p r i c e

now?
M R F R A N C I S Q U E N T I N C A L LA R D :

W e a r e g e t ti n g b a c k to t h e a c t u a l

p r i c e p a i d fo r t h e l o c o m o ti v e . I t i s t a k e n o u t o f h e r e f o r th e e v a l u a ti o n .
I t is la t e r a d d e d b a c k in t o t h e a c tu a l p r ic e o f t h e l o c o m o tiv e .
ADV MAHLAPE SELLO: And …

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20 MAY 2019 – DAY 96
C H A I R P E R S O N : N o a t t h a t p o i n t t h a t I c a n u n d e r s ta n d .
A D V M A H L A P E S E L L O : Ye s .
C H A I R P E R S O N : J a , j a t h a t I w o u l d u n d e r s t a n d . Th is o t h e r o n e w o u ld
n e e d m o r e c o n s i d e r a t io n .
A D V M A H L A P E S E L L O : In d e e d C h a ir. I t h i n k a n d y o u w i ll c o r r e c t m e
if I m i s u n d e r s t o o d .

A t t h i s p o in t o f e v a l u a t io n w h e n t h e o n e b i d d e r

t a k e s o ff 3 . 4 m il li o n a n d d r o p s s i g n i fic a n tl y t h e y w i ll s c o r e h ig h e r i n
t h e ir s c o r e s o n p r ic e a n d t h a t i s t h e a d v a n t a g e th e y g a i n a n d th a t
amount they have removed as TE impact and they are successful they
10

g o fo r w a r d t h e n f i n d s it s w a y b a c k t o t h e p r i c e . S o t h e y a c t u a l ly c a m e
in a t a h i g h e r p r ic e t h a n th e l o w e s t b i d d e r b u t s o m e h o w t h e y e n d e d u p
b e i n g t h e s u c c e s s f u l b id d e r. T h a t – th a t is t h e s y s t e m t h a t is a t p la y
h e r e . R e m e m b e r i n g C h a ir th a t b id d e r f iv e d id s a y I w ill – I h a v e ta k e n
in t o c o n s i d e r a t io n t h e p o s s i b i li ty o f u s i n g T E b u t w h e th e r w i t h T – w i t h
u s i n g T E o r a n y o t h e r s u b c o n tr a c t o r m y p r ic e r e m a i n s t h e s a m e . S o i t
m a y v e r y w e l l b e a n d w e w il l s e e a s t h e e v i d e n c e b e c o m e s – m o r e
e v i d e n c e b e c o m e s a v a il a b l e w h e t h e r th e p r o p e r in t e r p r e ta t io n o f R F P 2
w a s th a t y o u m a y c h o o s e t o u s e a s u b c o n tr a c to r a n d i n s o d o i n g y o u
m a y c h o o s e t o u s e T E . I f t h a t i s y o u r c h o ic e t h e – w h a t i t c o s ts y o u to

20

u s e T E a s a s u b c o n tr a c t o r o u g h t t o b e a r e s p o n s i b i li ty y o u ta k e o n t o
yourself.

S o w h e n y o u c o m e in a t a p r i c e o f 3 8 – 3 . 8 – 3 8 m il li o n

in c l u d i n g T E t h a t is h o w y o u s tr u c t u r e d y o u r b id . To t h e n b e a s k e d to
t a k e o u t T E p r e s u m e s t h a t t h e r e is a n a d v e r s e i m p a c t o n y o u r p r ic e
w i t h th e u s e o f T E a n d p e r h a p s th a t i s n o t a d e b a t e t o b e h a d w i t h t h is
w i t n e s s . Th o s e w h o p r o p a g a t e d f o r a c o n s i d e r a ti o n o f a p r i c e w i t h o u t

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20 MAY 2019 – DAY 96
t h e T E s u b c o n tr a c t o r m ig h t e x p l a i n to u s t h e lo g i c b e h i n d t h e th in k i n g
b e c a u s e I t h i n k c u r r e n tl y w e a r e – w e a r e s tr u g g li n g w i t h t h a t a p p r o a c h .
A ll w e k n o w is t h a t i t – i t a p p e a r s to p o s i tiv e ly b e n e fi t s o m e b i d d e r s
a n d i t a d v e r s e ly i m p a c ts t h o s e w h o d i d n o t …
CHAIRPERSON : Ja.
A D V M A H L A P E S E L L O : Ye s .
C H A I R P E R S O N : I – I w il l l is te n m o r e a n d …
A D V M A H L A P E S E L L O : W e w il l ( i n d is t in c t) fo r n o w.
CHAIRPERSON :
10

I u n d e r s t a n d th e o n e w h e r e t h e y b r in g i t b a c k th e

u n f a i r n e s s m u c h b e t te r t h a n t h e o n e
A D V M A H L A P E S E L L O : Th a n t h is o n e ?
CHAIRPERSON : Where they take it out, ja.
ADV MAHLAPE SELL O: Let us see if it improves Chair …
CHAIRPERSON : Put it back.
ADV MAHLAPE SELLO:

As we go along.

Thank you.

So you – you

d e a l fr o m p a r a g r a p h 1 7 0 w i th t h e – a n e x e r c is e u n d e r t a k e n i n r e s p e c t
o f t h e d ie s e l l o c o m o ti v e s ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : I t i s m o r e o r le s s th e s a m e ?
20

M R F R A N C I S Q U E N T I N C A L LA R D :

I t is m o r e o r l e s s t h e s a m e . I t is

more or less the same.
A D V M A H L A P E S E L L O : Yo u h o w e v e r i n y o u r s u p p l e m e n ta r y s t a te m e n t
– y o u h o w e v e r i n y o u r s u p p l e m e n ta r y s t a t e m e n t a t p a g e 3 p a r a g r a p h 1 4
in r e s p e c t o f y o u r p a r a g r a p h 1 7 0 i n y o u r o r i g i n a l s ta t e m e n t – y o u
in tr o d u c e fu r t h e r d o c u m e n t a ti o n in l ig h t o f t h e f a c t t h a t t h e – t h e d i e s e l

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20 MAY 2019 – DAY 96
e v a l u a t i o n f o l lo w e d t h e s a m e p r o c e s s a s i n e l e c tr i c a n d t h e r e i s n o
n e e d t o g o th r o u g h th a t d e ta il .

I w o u l d li k e y o u to e x p l a i n t h e

r e l e v a n c e o f i n tr o d u c in g t h o s e d o c u m e n ts t o y o u r p a r a g r a p h 1 7 0 w h e n
d e a li n g w i t h th e e v a l u a t i o n .
M R F R A N C I S Q U E N T I N C A L LA R D : C e r t a i n ly.
CHAIRPERSON :

Yo u m a d e a r e r e fe r e n c e to t h e s u p p le m e n t a r y

s t a te m e n t .
ADV MAHLAPE SELLO:

Supplementary

statement

page

3

C h a ir

p a r a g r a p h 1 4 a n d it i n d ic a t e s a t p a r a g r a p h 1 7 0 w h ic h is t h e p a r a g r a p h
10

w e a r e d e a li n g w i t h i n t h e m a i n s t a te m e n t a n d a t p a r a g r a p h 1 4
M r C a l l a r d s a y s h e w is h e s t o in tr o d u c e t h r e e e m a il s i n r e s p e c t o f
c la r i fi c a t io n l e tt e r s r e l a ti n g t o t h e i m p a c t o f T E s u b m i t te d b y C N R i n
respect of diesel.
M R F R A N C I S Q U E N T I N C A L LA R D :

If I may take that and it is in

r e s p e c t o f C S R D i e s e ls .
ADV MAHLAPE SELL O: CSR Diesels, yes.
M R F R A N C I S Q U E N T I N C A L LA R D : C S R D i e s e l s , y e s .
ADV MAHLAPE SELLO: Hm …
M R F R A N C I S Q U E N T I N C A L LA R D : C S R a ls o b i d f o r d ie s e l .
20

ADV MAHLAPE SELL O: Then let us look at our paragraph 14. We say
s u b m i tt e d b y C N R . M u s t w e c o r r e c t s o m e t h i n g a t p a g e 3 ?
M R F R A N C I S Q U E N T I N C A L LA R D :

Paragraph

14

–

a p o lo g i e s f o r th a t s li p u p . Th a t s h o u ld r e a d d e fi n i t e l y C S R .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t s h o u ld r e a d C S R .

Page 183 of 247

s o r r y.

My

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

W e w il l c o r r e c t th a t a c c o r d i n g ly, t h a n k y o u

a n d th e n th a t s e r i e s o f d o c u m e n ts s t a r ts fr o m s u p p l e m e n t a r y p a g e 2 6 ?
M R F R A N C I S Q U E N T I N C A L LA R D : C e r t a i n ly, t h a n k y o u . I f I – it s t a r ts
on 26.
ADV MAHLAPE SELLO: 27.
M R F R A N C I S Q U E N T I N C A L LA R D : If I m a y g o t o 2 7 p l e a s e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

2 7 a n d if w o u l d c o u l d l o o k a t t h e

m i d d l e o f th a t p a g e . I t is a n e m a il fr o m M s M d l e ts h e t o C S R s u p p l i e r
10

4 2 6 - s u p p li e r 4 6 5 n e w d i e s e l lo c o m o t iv e s .
“Dear

t e n d e r e r,

please

f in d

attached

fo r

your

in f o r m a ti o n … ”
A n d t h a t is o n D e c e m b e r, t h e 2 n d .
C S R r e s p o n d o n 4 D e c e m b e r w it h a c l a r i f ic a t io n to T F R a n d th is i s i n
r e s p o n s e t o t h a t l e t t e r.
“ Pl e a s e g iv e u s t h e i m p a c t o f y o u r p r ic e f o r n o t
u s i n g T E .”
C H A I R P E R S O N : I a m s o r r y. T h e a t ta c h m e n t t o M s M d le ts h e ’s e m a il is
– is it t h e o n e i m m e d ia t e l y a f t e r t h a t e m a il ?
20

M R F R A N C I S Q U E N T I N C A L LA R D :

I m m e d i a t e ly – t h is i s th e r e p ly.

T h i s is th e r e p ly r e c e iv e d o n 4 D e c e m b e r a t …
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : 11 : 5 7 .
C H A I R P E R S O N : B u t w h e r e – w h e r e i s t h e a t t a c h m e n t f ir s t ?
M R F R A N C I S Q U E N T I N C A L LA R D : O h , h e r l e t te r w h i c h w e d e a l t …

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20 MAY 2019 – DAY 96
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D :

I d i d n o t a tt a c h th a t .

Th is is t h e

i m p o r t a n t p a r t w a s h e r e p ly.
CHAIRPERSON :

B e f o r e I s e e a r e p ly I n e e d t o k n o w w h a t w e n t t o –

w h a t i s b e i n g r e s p o n d e d to .
M R F R A N C I S Q U E N T I N C A L LA R D : W e c a n a d d t o t h a t . W e w ill h a v e
that.
C H A I R P E R S O N : O h i t is n o t h e r e ?
M R F R A N C I S Q U E N T I N C A L LA R D : It is n o t h e r e .
10

C H A I R P E R S O N : O k a y. D o y o u k n o w w h a t i t s a i d ? A r e y o u a b le t o s a y
what is said?
M R F R A N C I S Q U E N T I N C A L L A R D : Ye s . I t w a s …
CHAIRPERSON : The gist of it.
M R F R A N C I S Q U E N T I N C A L LA R D : Th e g i s t o f i t w a s t h e tw o t a b l e s o n
p a g e 2 8 i t a s k e d t h e m t o c o m p l e te t h e t w o t a b le s o n p a g e 2 8 .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : O n s u p p l e m e n t a r y 2 8 .
CHAIRPERSON : Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D :

20

What would be the impact – what

w o u ld b e th e R a n d i m p a c t o n y o u r p r ic e p e r lo c o m o t iv e i f y o u d id n o t
u s e T E a s a lo c a l s u b c o n tr a c to r b u t u s e d a n a l t e r n a t iv e lo c a l p r iv a te
s e c t o r s u b c o n tr a c t o r ?
C H A I R P E R S O N : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : A n d t h e s e c o n d q u e s t i o n w a s w h a t
w o u ld b e y o u r p r ic e p e r l o c o m o ti v e i f y o u d i d n o t u s e T E a s a lo c a l

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20 MAY 2019 – DAY 96
s u b c o n tr a c t o r b u t u s e d a n a l t e r n a ti v e l o c a l p r i v a t e s u b c o n tr a c t o r.

It

w a s e s s e n t ia ll y t h o s e t w o q u e s ti o n s .
C H A I R P E R S O N : W h a t i s t h e d i ff e r e n c e b e t w e e n t h e t w o q u e s ti o n s ?
M R F R A N C I S Q U E N T I N C A L LA R D :

O n e – w h a t – th e fi r s t o n e w a s

what would be the Rand impact on your price …
CHAIRPERSON :

I t h in k t h e d i ff e r e n c e w o u l d b e s o m e w h e r e to w a r d s

t h e e n d o f t h e q u e s ti o n b u t I a m n o t s u r e w h a t it is .
M R F R A N C I S Q U E N T I N C A L LA R D : W e l l …
C H A I R P E R S O N : Is i t – a r e th e tw o q u e s t i o n s n o t c o m p l e t e ly id e n tic a l?
10

M R F R A N C I S Q U E N T I N C A L LA R D : T h e o n e …
ADV MAHLAPE SELLO: No.
M R F R A N C I S Q U E N T I N C A L LA R D : T h e f i r s t q u e s ti o n w e a r e s a y i n g i f
y o u d i d n o t u s e T E w h a t w o u l d b e y o u r – i f y o u d id n o t u s e T E h o w
m u c h w o u ld y o u s a v e . T h e a n s w e r t o t h a t …
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : W o u l d b e I w o u l d s a v e R 1 0 0 , 0 0 .
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D : T h e s e c o n d q u e s ti o n is w e ll i f y o u
s a v e d t h is R 1 0 0 , 0 0 w h a t is t h e n e w p r i c e o f y o u r l o c o m o tiv e .

20

CHAIRPERSON :

S o t h e f ir s t o n e r e l a te d t o t h e o v e r a ll p r ic e a n d t h e

s e c o n d o n e r e la t e d t o th e p r ic e f o r e a c h l o c o m o t iv e .
ADV MAHLAPE SELLO: No.
M R F R A N C I S Q U E N T I N C A L LA R D : Th e f i r s t o n e r e l a te d – t h e f ir s t o n e
r e l a t e d Mr C h a ir t o h o w m u c h m o r e e x p e n s iv e T E is th a n a p r iv a te
s u b c o n tr a c t o r.

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20 MAY 2019 – DAY 96
CHAIRPERSON :

S o – s o th e fir s t o n e r e l a te s t o w h a t w e h a v e b e e n

d e a li n g w i t h n a m e ly …
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : Ye s .
C H A I R P E R S O N : I f y o u – i f y o u d is r e g a r d th e u s e o f T E w h a t w o u l d –
what would be your price.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : In e ffe c t.
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s c o r r e c t .
10

ADV MAHLAPE SELLO:

Th e fir s t o n e C h a ir i f y o u d is r e g a r d T E h o w

m u c h s h o u l d w e d e d u c t f r o m y o u r p r ic e .
CHAIRPERSON : Ja, but if you know what you – must be deducted then
y o u k n o w w h a t t h e p r ic e w o u ld b e . Is i t n o ?
A D V M A H L A P E S E L L O : J a , t h e n th a t i s t h e s e c o n d q u e s ti o n .
CHAIRPERSON : Ja.
ADV MAHLAPE SELL O: So therefore …
CHAIRPERSON : Ja.
A D V M A H L A P E S E L L O : Th e n e w p r i c e w i l l b e . . .
C H A I R P E R S O N : Ye s .
20

A D V M A H L A P E S E L L O : Th e s e c o n d – i n t h e s e c o n d b lo c k .
CHAIRPERSON :

But the – what would be the Rand impact on your

p r i c e . O h , t h e – t h e fi r s t o n e is a l s o p e r l o c o m o t iv e ?
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : O n y o u r p r i c e p e r l o c o m o tiv e if y o u d i d n o t u s e t o T E

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20 MAY 2019 – DAY 96
a s a l o c a l c o n tr a c to r b u t u s e a s a n a l te r n a t iv e l o c a l p r iv a t e s e c t o r.
W h a t w o u l d y o u r p r i c e p e r lo c o m o t iv e b e if y o u d id n o t u s e T E a s a
lo c a l? N o , I a m n o t s u r e . I t h o u g h t I w a s s e e i n g w h a t t h e d i ffe r e n c e is .
I a m n o t s u r e r i g h t n o w w h a t i t is .

O k a y.

L e t u s – l e t u s l o o k a t it

a g a in .
ADV MAHLAPE SELL O: Perhaps if we …
C H A I R P E R S O N : W h a t w o u ld b e t h e R a n d …
A D V M A H L A P E S E L L O : L o o k a t t h e fi r s t o n e – i m p a c t o n y o u r p r ic e .
CHAIRPERSON :
10

W h a te v e r – w h a t e v e r i m p a c t – o h , t h e o n e w a n ts a n

i m p a c t.
A D V M A H L A P E S E L L O : O n y o u r p r ic e .
C H A I R P E R S O N : T h e o t h e r o n e w a n ts a n a c t u a l p r ic e .
A D V M A H L A P E S E L L O : Th e a c tu a l p r ic e n o w.
C H A I R P E R S O N : B u t a c t u a ll y b y u s i n g - i f y o u a n s w e r t h e f ir s t o n e y o u
c a n ( i n te r v e n e s ) .
A D V M A H L A P E S E L L O : I t b e c o m e s a m a t h e m a t ic a l …
CHAIRPERSON : Answer the second one …
A D V M A H L A P E S E L L O : Ye s .
CHAIRPERSON : Without …

20

M R F R A N C I S Q U E N T I N C A L LA R D :

The

second

one

s h o u ld

a u t o m a ti c a ll y f o ll o w.
C H A I R P E R S O N : A u t o m a t ic a l ly f o ll o w.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : Ye s , o k a y.
A D V M A H L A P E S E L L O : B u t t h e y e le c te d t o p o s e t h e tw o q u e s t io n s .

Page 188 of 247

20 MAY 2019 – DAY 96
CHAIRPERSON : Ja, okay alright.
ADV MAHLAPE SELLO:
obvious

that

if

you

A n d p e r h a p s a s w e s h a l l s e e i t is n o t s o
remove

the

impact

of

th e

p r ic e

you

can

a u t o m a ti c a ll y c a l c u la t e t h e o t h e r a s I t h i n k M r C a ll a r d w il l n o w
demonstrate …
M R F R A N C I S Q U E N T I N C A L LA R D : J a .
ADV MAHLAPE SELL O: For us.
M R F R A N C I S Q U E N T I N C A L LA R D :

And the purpose of these three

e m a i ls M r C h a ir is i f w e lo o k a t 2 7 – p a g e - s u p p l e m e n t a r y p a g e 2 7 .
10

C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

A t t h e t o p w e s e e t h i s fir s t e m a i l

c o m e s in o n W e d n e s d a y 4 D e c e m b e r 2 0 1 3 a t 11 : 5 7 . Th a t is t h e s e c o n d
p r i n t l in e .
C H A I R P E R S O N : T h e t o p o n e , ja .
M R F R A N C I S Q U E N T I N C A L LA R D : J a .
C H A I R P E R S O N : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : A n d w e h a v e t h i s v e r y f o r m a l l e t te r
all very complete.
C H A I R P E R S O N : O k a y. S o th a t to p e m a il a t p a g e 2 7 is t h e o n e th a t is
20

a c c o m p a n i e d b y t h e le t t e r a t p a g e 2 8 ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
C H A I R P E R S O N : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

I t a ls o h a s a n a d d i t io n a l c o m m e n t

w h ic h I c a n n o t e x p l a in a n d t h a t i s i n p a r a g r a p h 4 a n d I r e a d :
“Despite

the

a f o r e m e n ti o n e d

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and

in

s p e c i f ic

20 MAY 2019 – DAY 96
r e s p o n s e t o y o u r q u e r ie s w e p r o v id e h e r e u n d e r a n
e s ti m a t e o f t h e i n fo r m a t i o n r e q u e s t e d b y y o u b a s e d
on

the

r e v is e d

fi g u r e s

f u r n is h e d

to

you

on

2 9 N o v e m b e r 2 0 1 3 .”
I am not sure where that comes from at all.
A D V M A H L A P E S E L L O : A n d t h is is t o – t h is is i n r e s p e c t – in r e s p e c t
o f t h e b id s t h a t c l o s e d o n 3 0 A p r i l 2 0 1 3 o r 2 0 1 4 ?
M R F R A N C I S Q U E N T I N C A L LA R D : 2 0 1 3 .
ADV MAHLAPE SELL O: 2013?
10

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : O k a y. S o …
M R F R A N C I S Q U E N T I N C A L LA R D :

I f I m a y t h e n – s o w e h a v e l e t te r

o n e c o m i n g in a t 11 :5 7 . I f w e c o u ld g o t o s u p p l e m e n t a r y 3 0 p le a s e .
ADV MAHLAPE SELLO: Page 30?
M R F R A N C I S Q U E N T I N C A L LA R D : P a g e 3 0 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : S u p p l e m e n t a r y p a g e 3 0 .
ADV MAHLAPE SELL O: Sorry before we go there.
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.
20

A D V M A H L A P E S E L L O : W e a r e s ti ll a t 2 8 .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s , o h .
A D V M A H L A P E S E L L O : Th a t m a th e m a t ic a l e x e r c is e t h e C h a ir a s k e d .
M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u , y e s .
A D V M A H L A P E S E L L O : Th a n k y o u .
M R F R A N C I S Q U E N T I N C A L LA R D :

Yo u w i ll n o tic e t h a t u n d e r p o in t

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20 MAY 2019 – DAY 96
o n e th e r e a t p a r a g r a p h 4 i n th e ir t a b l e o n e . W h a t w o u l d b e th e R a n d
i m p a c t o f y o u r p r ic e ? Th a t is t h e n g iv e n a t 6 .6 m il li o n r o u n d e d fi g u r e s
p e r l o c o m o tiv e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

W h ic h w o u l d b e t h e R a n d i m p a c t

o n th e ir p r ic e . T h is d o e s n o t a c c o r d w i t h a n y o f th e o t h e r f ig u r e s w e
h a v e s e e n a n d i t is – i t is a h ig h e r fi g u r e t o r e d u c e th e p r i c e o f y o u r
lo c o m o t iv e o r g o t o g iv e a R a n d i m p a c t.
ADV MAHLAPE SELLO:
10

S o d o w e i n t e r p r e t t h a t to m e a n it is

s u g g e s t e d y o u ta k e m y b i d p r i c e , y o u d e d u c t 6 .6 m i ll i o n a n d y o u a r r i v e
a t t h e p r ic e n o w o f 3 2 m i ll io n w h ic h is m y b i d w i th o u t u s i n g T E ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t w o u ld b e t h e …
A D V M A H L A P E S E L L O : Th a t i s t h e l o g ic o f …
M R F R A N C I S Q U E N T I N C A L LA R D :

The argument we have followed

yes.
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : S o t h e n y o u w a n t e d u s t o g o to 3 0 .
M R F R A N C I S Q U E N T I N C A L LA R D : P a g e 3 0 .
20

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

N o w t h is is f r o m t h e – t h e s a m e

in d i v i d u a l a ls o a d d r e s s e d t o M s M d l e ts h e .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

A ls o o n 4 D e c e m b e r b u t i t is

r e c e i v e d a 1 8 .2 1 , th a t is t w e n ty o n e p a s t s ix i n t h e e v e n in g .

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : I t c o m e s in a l t e r t h a n th e fir s t .
M R F R A N C I S Q U E N T I N C A L LA R D : L a t e r t h a n th e fir s t .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T IN C A L L A R D :

W e w i ll s e e th a t t h e t o p p a r t o f

t h a t e m a i l, i n fa c t i t ’s j u s t a f o l lo w o n f r o m t h e fir s t e m a il b e c a u s e t h e
fir s t e m a il w e s e e th e r e a t 11 : 5 7 w e s e e a n o th e r e m a il , w h ic h is n o t
r e fe r e n c e d h e r e a t 1 2 . 0 3 , w e d o n ’ t k n o w t h e d e t a il o f th a t e m a i l, t h e n
w e s e e th is e m a i l o f 1 8 : 2 1 .
A D V M A H L A P E S E L L O : Ye s .
10

M R F R A N C I S Q U E N T I N C A L LA R D :

A n d e x a c t ly th e s a m e c o n te n ts ,

p l e a s e fi n d t h e a tt a c h e d , r e q u e s t a c la r i f ic a t io n l e t t e r f o r y o u r u r g e n t
a tt e n ti o n , e x a c tl y t h e s a m e w o r d in g a s t h e 11 : 5 7 e m a il .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

I f w e r e f e r th e n t o th e a t t a c h e d

le t t e r w h i c h i s p a g e 3 2 o f t h e s u p p l e m e n t w e s e e e x a c tly th e s a m e
f o r m a l le t t e r.
A D V M A H L A P E S E L L O : Ye s .
M R FR A N C I S Q U E N T I N C A L L A R D :

W e fi n d n o r e tr a c ti o n o f th e

o r i g in a l l e t te r, n o r e fe r e n c e t o t h e o r i g i n a l l e t te r, b u t j u s t a b r a n d n e w
20

le t t e r, b u t i f w e lo o k a t p a r a g r a p h – t h e i r p a r a g r a p h 4 a n d t h e b u ll e t
p o i n t s a n d t h e t a b l e o n e , t a b l e o n e s ti ll s a y s R a n d i m p a c t a t 6 . 6 m il li o n
6 .7 m i ll io n r o u n d e d .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : A n d n o w th e p r ic e p e r lo c o m o t iv e
a t p o i n t t w o in t h e ta b l e h a s c h a n g e d t o 2 9 . 4 m il li o n r o u n d e d w h ic h is

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20 MAY 2019 – DAY 96
s o m e c h a n g e fr o m t h e 3 2 m i ll io n , 3 2 . 9 m il li o n o f th e p r e v i o u s l e t te r.
A D V M A H L A P E S E L L O : S o w e s t il l d e d u c t t h e s a m e a m o u n t , t h a t ’s 6 . 6
b u t in t h e f ir s t le t t e r th e y s a y t h a t th e n r e s u l ts in a n e w p r i c e o f
R 3 2 m i ll io n , 3 2 .9 .

In the second letter they say removing the same

a m o u n t t h is ti m e i t c o m e s 2 9 . 3 m il li o n .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : O k a y.
C H A I R P E R S O N : S o w e c a n ’t s a y t h is is a c o n ti n u a t i o n o f w h a t w e s a w
w i t h r e g a r d to w h a t w a s h a p p e n in g w i t h i n Tr a n s n e t i n r e g a r d to t h e
10

k in d s o f m is t a k e s t h a t w e t a lk e d a b o u t w h e n , y o u t a l k e d a b o u t w h e n
you gave evidence about your memorandum where you were asked to
m a k e c h a n g e s a n d w h a t w e t a l k e d a b o u t i n th e m o r n in g w h e r e th is
s e e m s to b e o b v i o u s c o n tr a d ic ti o n s o f t h i n g s t h a t s h o u l d b e q u i te c l e a r
b u t w h a t is p u t is d i ff e r e n t , i t ’s t h e s a m e t h i n g b u t h a p p e n i n g w i t h C S R
n o w w h a t w a s h a p p e n i n g w i t h Tr a n s n e t is h a p p e n in g w i t h C S R n o w.
M R FR A N C I S Q U E N T I N C A L L A R D :

W e ll m a y I t a k e y o u t h r o u g h t h e

t h ir d l e tt e r M r C h a ir a n d i f w e c o u l d b r in g a d d r e s s y o u r p o i n t a f t e r t h e
t h ir d l e t te r.
C H A I R P E R S O N : O k a y.
20

MR FRANCIS QUENTIN CALLARD :

W e t h e n h a v e a t h ir d e m a il a n d

t h is is o n p a g e 3 4 o f t h e s u p p l e m e n ta r y.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D :

A ls o t h e 4 t h o f D e c e m b e r o n t h e

s e c o n d l in e , i t’s n o w r e c e iv e d a t 1 9 : 4 4 , t h e p r e v i o u s o n e w a s r e c e iv e d
a t 1 8 : 2 1 w e ’r e n o w a t 1 9 : 4 4 s o w e ’r e a b o u t a n h o u r a n d te n m i n u t e s , a n

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20 MAY 2019 – DAY 96
h o u r t w e n ty m i n u t e s la t e r.
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QU ENTIN CALLARD:

A n d in t e r e s ti n g i f w e lo o k a t t h e

tr a c e o f e m a il s w e s e e a n e m a il a t 6 . 2 1 , t h a t ’s t h e – o n p a g e ,
supplementary 34.

W e t h e n s e e a n e m a i l a t 6 3 8 o f w h ic h I h a v e n o

d e t a i l a t th e m o m e n t i n t h is , w e t h e n s e e t h is e m a il o f 1 9 4 4 w h ic h
reads:
“ Pl e a s e f in d t h e a t t a c h e d o n c e a g a i n a n d a p o l o g i e s f o r th e
in c o n v e n i e n c e .”
10

S o w e n o w h a v e a t h ir d l e t te r a n d i f w e m a y g o t o th a t t h i r d l e tt e r
p l e a s e , w h ic h i s o n s u p p le m e n t a r y 3 6 .

Again refer to – and may I

h i g h l ig h t a f u r t h e r s i g n i fi c a n t d i ffe r e n c e M r C h a ir m a n , i f w e lo o k a t
. . .( i n te r v e n t io n )
A D V M A H L A P E S E L L O : S o r r y M r C a l l a r d I k n o w t h e C h a ir l a u g h e d b u t
it m u s t s t il l g o o n t h e r e c o r d .
M R F R A N C I S Q U E N T I N C A L LA R D : M y a p o l o g i e s .
A D V M A H L A P E S E L L O : P l e a s e a d d r e s s y o u r s e l f to p a g e 3 6 .
MR FRANCIS QU ENTIN CALLARD : I’m addressing myself to page 36,
p a r a g r a p h 4 , t h e a b o v e p a r a g r a p h 4 n o t ic e t h a t t h e r e h a s b e e n a s u b tl e
20

c h a n g e n o w in t h a t w h e r e a s I p r e v i o u s ly h i g h l ig h te d 2 9 t h o f N o v e m b e r
2 0 1 3 , p a r a g r a p h 4 n o w r e a d s d e s p i te th e a fo r e m e n ti o n e d a n d in
s p e c i f ic r e s p o n s e t o y o u r q u e r ie s w e p r o v i d e h e r e u n d e r a n e s ti m a t e o f
t h e in f o r m a t io n r e q u e s t e d b y y o u b a s e d o n th e b i d d i n g f ig u r e s
f u r n is h e d t o y o u o n 3 0 A p r il 2 0 1 3 , w h ic h w a s w h e n t h e b id s c l o s e d .
ADV MAHLAPE SELLO : Ja.

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20 MAY 2019 – DAY 96
MR

FRANCIS QUENTIN

CALLARD :

Changed

fr o m t h e

29th of

N o v e m b e r o f t h e f ir s t l e t t e r, I w is h t o h i g h li g h t th a t . T h e n w e c o m e to
p o i n t o n e in t h e t a b l e a n d t h e R a n d i m p a c t fi g u r e n o w b e c o m e s
1 .5 m i ll io n r o u n d e d .
rounded.

T h e p r ic e p e r l o c o m o ti v e is n o w 2 9 . 4 m il li o n

Yo u r fir s t, y o u r p o i n t y o u m a d e b e f o r e I c a m e t o t h is Mr

C h a ir m a n i s t h i s th e s a m e , I s u b m i t t h a t t h is i ll u s tr a te s t h e p o in t y o u
were making that ...
C H A I R P E R S O N : I m e a n i t’s q u i t e s tr a n g e , th e q u e s t io n s u n d e r 4 . 1 t h e
q u e s t io n s r e m a i n t h e s a m e a n d t h e y a r e r e s p o n d e d t o i n a l e t te r th a t
10

s a v e fo r t h e f ig u r e s s e e m t o b e i d e n ti c a l s a v e fo r t h e f ig u r e s a n d
m a y b e s o m e fe w w o r d s .
A D V M A H L A P E S E L L O : Ye s .
C H A I R P E R S O N : B u t t h e q u e s ti o n i n r e g a r d t o t h e fi r s t o n e , t h e a n s w e r
t o t h e f ir s t q u e s ti o n is t h a t i t ’s s ix m il li o n , 6 . 6 m ill i o n r o u n d e d t o t h e
n e a r e s t fi g u r e , a n d th e n th e s e c o n d f ig u r e , t h e a n s w e r t o th e s e c o n d
q u e s t io n is 3 2 . 9 m il li o n r o u n d e d a n d t h e n y o u g o to t h e n e x t , t h a t w a s a t
2 8 , th e n a t 3 2 , s a m e q u e s ti o n s , o n e u n d e r f o u r, th e a n s w e r g i v e n is
6 .6 m i ll io n r o u n d e d t o t h e s a m e q u e s t i o n n u m b e r t w o , t h e a n s w e r i s n o w
d i ff e r e n t , i t’s 2 9 . 3 r o u n d e d , y o u g o t o th e l a s t o n e a t 3 6 – a n s w e r t o th e

20

fir s t q u e s t io n is v e r y, v e r y d i ff e r e n t n o w, i t’s 1 . 5 m i ll io n r o u n d e d a n d
t h e n y o u g o t o t h e s e c o n d q u e s t i o n th e a n s w e r is n o w d i ff e r e n t, o h th e
a n s w e r is th e s a m e a s i n t h e s e c o n d q u e s t io n , s o i n e ff e c t i f y o u l o o k a t
2 8 t h e y s a y i f y o u d e d u c t 6 . 6 m il li o n fr o m t h e ir p r i c e t h e ir p r ic e w il l b e
32.9 and then in the second one at page 32 they say if you deduct
6 .6 m i ll io n f r o m t h e ir p r i c e th e ir p r ic e w il l 2 9 . 3 a n d in t h e th ir d o n e t h e y

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20 MAY 2019 – DAY 96
s a y if y o u d e d u c t 1 . 5 m il li o n f r o m t h e ir p r ic e t h e ir p r ic e w o u l d b e 2 9 . 3 .
A D V M A H L A P E S E L L O : Th a t ’s th e m a t h e m a t ic s .
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D : C h a i r i f I m a y a d d th e p o i n t , t h e s e
a r e a ll o ff ic ia l , a p p e a r to b e o ffi c i a l l e t t e r s d a te d , s t a m p e d b y t h e
a p p r o p r i a t e a u t h o r i t ie s , t h e y ’r e a ll d a t e d t h e s a m e d a y, n o t o n e le t t e r
r e fe r s to a r e t r a c t i o n o r c a n c e l la t io n o f a p r e v io u s le t t e r.
CHAIRPERSON :

A n d t h e y a r e w r i t t e n b y t h e s a m e p e r s o n , is t h a t

r ig h t ?
10

MR FRANCIS QUENTIN CALLARD:
same

email

addressed

i n d iv id u a l

T h e y a r e , t h e y a ll c o m e fr o m th e
at

a

fir s t

glance

I

would

. . .( i n te r v e n t io n )
C H A I R P E R S O N : A n d t h e a u t h o r s e e ms t o b e t h e s a m e .
MR FRANCIS QUENTIN CALLARD:

. . .s u b m i t th a t t h e – I a m n o t a n

e x p e r t o n C h i n e s e s i g n a t u r e s if I m a y p u t i t th a t w a y.
C H A I R P E R S O N : O h , b u t t h e n a m e th a t i s g iv e n .
A D V M A H L A P E S E L L O : AT l e a s t t h e c o m p a n y is th e s a m e ?
MR FRANCIS QUENTIN CALLARD :

The company is the same, the

s ig n a tu r e s a t fir s t g l a n c e a p p e a r t o b e th e s a m e .
20

ADV MAHLAPE SELL O : Chinese.
C H A I R P E R S O N : O h , ja . J a , n o .
ADV MAHLAPE SELLO:

A n d th e n i f I m a y ju s t r o u n d u p o n t h a t y o u

in d i c a t e d t h a t t h e s e c l a r i f ic a ti o n s w e r e i n r e s p o n s e to a f u r th e r
t e l e p h o n e c a ll to C S R o f t h e 4 t h o f D e c e m b e r w h e n t h e y a p p e a r e d t h e i r
fir s t c l a r i f ic a ti o n c r e a t e d p r o b le m s a n d t h a t i s a t p a g e 6 9 2 w h ic h is

Page 196 of 247

20 MAY 2019 – DAY 96
Annexure 84.
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s . . .
A D V M A H L A P E S E L L O : A t t h e fi r s t b u l l e t p o in t th e r e s o w e k n o w t h e
c o n v e r s a ti o n t o o k p la c e o n t h e 4 t h o f D e c e m b e r a c c o r d in g t o th a t
r e p o r t , b e t w e e n Tr a n s n e t a n d C S R .
CHAIRPERSON :
marks?

A n d I g u e s s i t h a s t o b e c l a r i fi c a t i o n i n q u o ta t io n

B e c a u s e t h e y d o n ’ t b r i n g a n y c la r i fi c a t io n , i n s t e a d th e y

c o m p o u n d th e c o n f u s i o n .
A D V M A H L A P E S E L L O : Th e n p e r h a p s M r C a ll a r d m i g h t b e a b le t o g i v e
10

u s t h is c l a r i f ic a ti o n , i f t h is c o n v e r s a t io n t a k e s p l a c e o n t h e 4 t h , t h e
e v e n i n g o f t h e 4 t h o f D e c e m b e r, w e l l y o u c a n ’ t e x p l a i n w h y, d o y o u
k n o w n o ti c e t h a t a l l t h e s e l e tt e r s a r e d a t e d t h e 3 r d o f D e c e m b e r 2 0 1 3 ,
s o p r e s u m a b ly b e f o r e t h e te le p h o n e c a l l w a s h e a r d .
MR FRANCIS QUENTIN CALLARD :

I t i s a n a n o m a ly th a t I c a n n o t

explain.
A D V M A H L A P E S E L L O : O k a y. C h a ir m i g h t t h is b e a n a p p r o p r i a t e t i m e
for that short break?
C H A I R P E R S O N : Ye s , y e s I a s s u m e y o u s p o k e t o Mr C a l la r d ?
A D V M A H L A P E S E L L O : C h a ir m a y I p l a c e o n r e c o r d .. .( i n t e r v e n ti o n )
20

C H A I R P E R S O N : I a s s u m e y o u s p o k e t o M r C a ll a r d a b o u t u s g o i n g u p
t o f iv e ?
A D V M A H L A P E S E L L O : Ye s I d i d .
C H A I R P E R S O N : It is a c c e p t a b l e to y o u ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s f i n e M r C h a ir.
CHAIRPERSON :

Okay thank you.

A l r ig h t , w e w i ll t a k e a s h o r t

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20 MAY 2019 – DAY 96
a d j o u r n m e n t n o w, b e c a u s e w e w il l g o o n u n til fi v e , w e w i ll t a k e a s h o r t
a d j o u r n m e n t a n d r e s u m e a t fi v e t o f o u r. T h a n k y o u , w e a d jo u r n .
I N Q U I RY A D J O U R N S
I N Q U I RY R E S U M E S
C H A I R P E R S O N : O k a y y o u m a y p r o c e e d M s S e ll o .
ADV MAHLAPE SELLO:

T h a n k y o u C h a ir.

M r C a ll a r d g e t t in g b a c k

t h e n t o y o u r p a r a g r a p h 1 7 0 I n o te th e r e u n d e r p a r a g r a p h 1 7 0 y o u h a v e
a ta b le t h a t y o u i n d ic a t e y o u e x tr a c te d f r o m p a g e s 1 2 a n d 1 3 , t y p e d
p a g e s 1 2 a n d 1 3 o f A n n e x u r e 8 4 a n d th a t w o u ld b e p a g i n a t e d 6 9 2 .
10

M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s c o r r e c t .
A D V M A H L A P E S E L L O : A n d I s e e t h e r e a n d I d e p a r t fr o m th e p r e m is e
t h a t b i d d e r 1 i s B o m b a r d ie r, a m I c o r r e c t ?
MR FRANCIS QUENTIN CALLARD :

T h i s is o n t h e d ie s e l l o c o m o tiv e s

no.
A D V M A H L A P E S E L L O : O h y e s t h i s is d i e s e l m y a p o lo g i e s .
M R F R A N C I S Q U E N T I N C A L LA R D : B id d e r 1 is C N R
ADV MAHLAPE SELL O : CNR. Bidder 2?
M R F R A N C I S Q U E N T I N C A L LA R D : Is C S R .
A D V M A H L A P E S E L L O : D o y o u r e c a ll B id d e r 3 ?
20

M R F R A N C I S Q U E N T I N C A L LA R D : B id d e r 3 w a s E M D .
ADV MAHLAPE SELLO: EMD.
MR FRANCIS QUENTIN CALLARD :

A n d Bi d d e r 4 w a s G E , G e n e r a l

E l e c tr i c .
A D V M A H L A P E S E L L O : O k a y t h e n u n d e r b i d d e r 2 C S R I s e e t h e fi g u r e
t h a t c o m e s t h r o u g h i n to t h e r e p o r t t o b e d e d u c t e d f o r T E is t h e fi g u r e

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20 MAY 2019 – DAY 96
g iv e n i n th e th ir d o f th e s e r ie s o f c la r i fi c a t i o n s y o u p o i n te d u s t o .
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s c o r r e c t y e s .
ADV MAHLAPE SELLO:

D o y o u k n o w o n w h a t b a s is t h a t fi g u r e w a s

c h o s e n o v e r t h e o th e r t w o fi g u r e s o f R 6 mi lli o n ?
M R F R A N C I S Q U E N T I N C A L LA R D : N o .
A D V M A H LA P E S E L L O :

O k a y.

P e r h a p s th e c r e a t o r s o f t h e r e p o r t

might guide us then.
M R F R A N C I S Q U E N T I N C A L LA R D : I w o u l d h a v e to r e f e r t o t h e m .
A D V M A H LA P E S E L L O :
10

W e t h e n m o v e o n t o y o u r – t h e o b s e r v a ti o n s

y o u m a k e o f t h e i m p a c t o n T E p r i c i n g o n t h e e l e c tr ic l o c o m o ti v e s a n d
y o u s ta r t w i t h th a t a t y o u r 1 7 1 .
M R F R A N C I S Q U E N T IN C A L L A R D : Ye s t h a n k y o u . A n d f o r 1 7 1 w h ic h
t a lk s t o p a g e 2 3 o f A n n e x u r e 8 3 w h i c h is p a g e 6 6 2 o f t h e b u n d l e I a m
d e a li n g h e r e w it h e l e c – t h e e le c tr i c l o c o m o tiv e s .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D : 6 6 2 . A n d I a m q u o t in g h e r e fr o m
b u ll e t p o in t – s u b b u ll e t 1 , 2 t h e b o t t o m o f t h e t h ir d s u b - b u ll e t p o i n t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

20

W h i c h h a s th e h e a d in g b i d d e r 1

a n d 3 h a v e n o t q u o t e d u s in g T E a s a m a i n s u b - c o n tr a c to r.

N o c la r i ty

w a s o b t a i n e d fr o m t h e s e b i d d e r s a s m e n ti o n e d in t h e r e p o r t a b o v e . I f
c la r i ty a n d t h is r e f e r s t o t h e d e b a te w h ic h w e w e r e h a v i n g .

If clarity

w a s o b ta i n e d fr o m th e s e tw o b i d d e r s a n d th e y in d i c a t e d t h e r e w a s n o
c h a n g e in p r i c e w h e th e r T E w i ll b e u s e d o r n o t a s w i t h t h e r e s p o n s e o n
b i d d e r 5 t h e n t h e i m p a c t o n th e e v a l u a ti o n s c o r in g r e s u l t c o u ld b e

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20 MAY 2019 – DAY 96
s ig n if ic a n t. T h is w a s t h e c o n c l u s i o n o f t h e C F E T t e a m a c k n o w l e d g i n g
t h a t th e i m p a c t o n t h e s c o r in g c o u l d h a v e b e e n s i g n i f ic a n t .
A D V M A H L A P E S E L L O : M r C a ll a r d l e t u s j u s t lo o k a t t h is . S h o u l d w e
b e w o r k in g o n 8 3 o r o n 8 4 ?
M R F R A N C I S Q U E N T I N C A L LA R D : Fo r t h e …
ADV MAHLAPE SELLO:

8 3 y o u a r e c o r r e c t . O h th e n w e a r e b a c k to

t h e e l e c tr ic l o c o m o t iv e s y e s .
M R F R A N C I S Q U E N T I N C A L LA R D :

T h a t w a s my c o n c l u s i o n o n th e

e l e c tr ic l o c o m o t iv e s y e s .
10

A D V M A H LA P E S E L L O : I n d e e d o k a y I f o l lo w y o u n o w n o t t h e d i e s e l s .
A n d y o u m a k e th e s a m e p o i n t th a t I th i n k y o u h a d p r e v i o u s l y m a d e t o
t h e C h a ir a t 1 7 4 w h ic h is t h a t i f is a c c e p t e d t h a t t h e r o l e o f T E w a s n o t
p r e s c r i b e d t h e n a p p l y i n g t h e i m p a c t u n f a i r ly f a v o u r e d B o m b a r d i e r a n d
CSR?
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s t h e c o n c lu s i o n o f a l l o f th is
in t h is p r o c e s s y e s .
A D V M A H L A P E S E L L O : A n d w e a r e s til l …
CHAIRPERSON : That is at what – at what page?
ADV MAHLAPE SELL O : Statement page 45 at paragraph 174.

20

CHAIRPERSON : Oh.
A D V M A H L A P E S E L L O : Th e s t a te m e n t a t …
CHAIRPERSON : Ja okay yes now I can see.
A D V M A H L A P E S E L L O : Ye s C h a ir. Ye s t h a n k y o u C h a ir.
CHAIRPERSON : Hm.
A D V M A H L A P E S E L L O : A n d w e w il l h o p e f u ll y b e f o r e w e c o m p l e te w it h

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20 MAY 2019 – DAY 96
y o u r s ta t e m e n t b e in a p o s it i o n to d e m o n s tr a te to t h e C h a ir t h a t t h e
o p i n i o n y o u e x p r e s s a t 1 7 4 is c o r r e c t ?
M R F R A N C I S Q U E N T I N C A L LA R D : N o w. . .
A D V M A H L A P E S E L L O : Th a t r e l a te s t o th e …
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H LA P E S E L L O : T h e n i f w e c o u l d i n t h e m e a n ti m e th e n m o v e
t o t h e n e x t w h ic h is u n d e r t h e h e a d i n g c o r r e l a ti o n .
10

MR FRANCIS QUENTIN CALLARD:

Ye s t h is is j u s t to s h o w w h e r e i t

c o m e s – i f w e r e f e r to p a g e 4 0 o f A n n e x u r e 8 3 w h ic h – w h ic h i s p a g e
679 where we have a legible copy under
A D V M A H L A P E S E L L O : S u p p l e m e n ta r y ?
MR FRANCIS QUENTIN CALLARD :

U n d e r t h e s u p p le m e n t a r y w h ic h

le g i b le c o p y i s a t – s u p p l e m e n ta r y 2 0 – s u p p l e m e n t a r y 2 3 .
ADV MAHLAPE SELLO: Page 23?
M R F R A N C I S Q U E N T I N C A L LA R D : P a g e 2 3 o f t h e s u p p le m e n t a r y.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : I f w e c o u l d th e n w h i le h o l d i n g t h a t
20

o p e n r e f e r t o A n n e x u r e 6 5 p le a s e .
A D V M A H L A P E S E L L O : A n n e x u r e 6 5 . A n d t h a t w il l b e a t 5 7 7 .
M R F R A N C I S Q U E N T I N C A L L A R D : A n n e x u r e 6 5 w h ic h is a t 5 7 7 a n d to
g iv e c o n te x t A n n e x u r e 6 5 is a r e p o r t fr o m t h e c r o s s f u n c t i o n e v a lu a ti o n
t e a m d a te d t h e 1 5 J a n u a r y 2 0 1 4 to th e l o c o m o ti v e s t e e r i n g c o m m i t t e e –
s t e e r i n g c o m m i t t e e . A n d t h e p u r p o s e i f I m a y s a y – th e p u r p o s e o f t h is

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20 MAY 2019 – DAY 96
m e m o r a n d u m is to p r o v i d e t h e s t e e r i n g c o m m i t t e e w i t h a n u p d a t e t o t h e
r e s u l t s o f th e b e s t a n d fi n a l o ff e r f r o m b id d e r s 1 a n d 2 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : I u s e t h e w o r d s b e s t a n d f i n a l o ff e r
w i t h d e li b e r a t e e m p h a s i s b e c a u s e I a m s u r e to t h e n o r m a l r e a d e r t h a t
t h e y h a v e a c e r t a i n c o n n o t a ti o n o f w h a t i s m e a n t b y b e s t a n d f i n a l o ff e r.
I t h e n – w e t h e n g o d o w n i f w e m a y t o t h e ir p o in t 5 . T h e t a b le b e lo w
o u t li n e s th e b u ff e r p r i c e s r e c e iv e d b y b id d e r s 1 a n d 2 . B i d d e r s 1 a n d 2
in t h is c a s e b e i n g B o m b a r d i e r a n d C S R r e s p e c tiv e ly.
10

A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:
supplementary

23

le f t

hand

I f I m a y t a k e – r e fe r n o w t o

column

b o tt o m

l in e

price

used

for

evaluation.
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CALLARD :

A n d u n d e r b i d d e r 1 t h a t is 3 2 . 8

m il li o n r o u n d e d .
A D V M A H L A P E S E L L O : Yo u r e f e r r in g u s t o A n n e x u r e ?
M R F R A N C I S Q U E N T I N C A L LA R D : S u p p l e m e n t a r y 2 3 th a t is …
A D V M A H L A P E S E L L O : Ye s .
20

CHAIRPERSON : Page 578.
A D V M A H LA P E S E L L O :

S u p p le m e n t a r y p a g e 2 3 .

Is th a t w h e r e y o u

r e fe r r e d u s to M r C a ll a r d ?
M R FR A N C I S Q U E N T I N C A L L A R D :

Ye s t h a t is t h e p a g e h e a d e d

r e c o n c i li a ti o n o f p r i c e .
A D V M A H L A P E S E L L O : Ye s .

Page 202 of 247

20 MAY 2019 – DAY 96
MR FRANCIS QUENTIN CALLARD:

W h i c h w a s t h e fi n a l p a g e o f t h e

C F E – C F E T r e p o r t o f t h e 1 0 D e c e m b e r.
A D V M A H LA P E S E L L O :

W h ic h is o u r A n n e x u r e 9 3 i n t h e m a in

s t a te m e n t ?
M R F R A N C I S Q U E N T I N C A L L A R D : C o r r e c t a n d th is is t h e l e g i b l e c o p y
of the page.
A D V M A H L A P E S E L L O : Ye s .
C H A I R P E R S O N : B u t y o u w e r e – w e r e y o u r e a d i n g j u s t n o w fr o m p a g e
5 7 8 t h a t is A n n e x u r e 6 5 a t t h e b o tt o m ?
10

B e c a u s e th a t i s w h e r e I w a s

r e a d in g .
M R F R A N C I S Q U E N T I N C A L LA R D : I w a s r e a d in g fr o m 5 7 8 y e s .
C H A I R P E R S O N : J a o k a y.
A D V M A H L A P E S E L L O : S o l e t u s ju s t f i n d o u r p la c e . Yo u r e fe r r e d u s
to Annexure 65
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : A t 5 7 8 . W e k e e p th a t p a g e o p e n .
M R F R A N C I S Q U E N T I N C A L LA R D : K e e p t h a t p a g e o p e n p l e a s e .
A D V M A H L A P E S E L L O : A n d y o u w a n t u s th e n t o g o t o s u p p l e m e n ta r y
page 23?

20

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : O k a y.
C H A I R P E R S O N : W e l l is t h a t w h a t y o u w a n t u s t o d o n o w ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s p l e a s e .
CHAIRPERSON:

B e c a u s e I th o u g h t y o u s a i d le t u s k e e p t h e m o p e n

a n d t h e n y o u c a m e to A n n e x u r e 6 5 . A r e y o u d o n e w i t h A n n e x u r e 6 5 o r

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20 MAY 2019 – DAY 96
not yet?
M R F R A N C I S Q U E N T I N C A L LA R D : N o . I w i s h t o c o r r e l a te b e t w e e n …
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : B e tw e e n t h e s e t w o p le a s e .
C H A I R P E R S O N : O k a y. O k a y.
A D V M A H L A P E S E L L O : O k a y.
C H A I R P E R S O N : A n d w e – m u s t w e s t il l b e h o l d in g 6 7 9 ?
M R F R A N C I S Q U E N T I N C A L LA R D : 6 7 9 .
CHAIRPERSON : Or not?
10

M R F R A N C I S Q U E N T I N C A L LA R D : 6 7 9 – 2 3 is a c l e a r p a g e o f 6 7 9 .
C H A I R P E R S O N : Ye s o k a y.
ADV MAHLAPE SELL O : Of 679.
C H A I R P E R S O N : S o w e d o n o t n e e d to …
M R F R A N C I S Q U E N T I N C A L LA R D : 2 3 i s t h e c l e a r p a g e .
C H A I R P E R S O N : O k a y a lr i g h t. Ye s w e n o w g o t o 2 3 – p a g e 2 3 o f t h e
s u p p l e m e n t a r y. O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : L e f t h a n d c o l u m n .
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : Pr ic e u s e d f o r e v a l u a t io n .

20

CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : 3 2 . 8 m il li o n r o u n d e d .
A D V M A H L A P E S E L L O : Ye s f o r b id d e r 1 ?
M R F R A N C I S Q U E N T I N C A L LA R D : Fo r b i d d e r 1 .
A D V M A H L A P E S E L L O : Ye s .
C H A I R P E R S O N : I a m s o r r y.

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : L e f t h a n d c o l u m n .
A D V M A H L A P E S E L L O : A t p a g e s u p p le m e n t a r y 2 3 .
C H A I R P E R S O N : J a I th a t i s w h e r e I a m .
M R F R A N C I S Q U E N T I N C A L LA R D : O k a y.
CHAIRPERSON :

Yo u a r e n o t r e a d in g a t t h e t o p ?

Yo u s a y p r ic e p e r

lo c o a s s u b m it t e d b y b i d d e r is t h a t w h e r e y o u r e a d j u s t n o w ?
MR FRANCIS QU ENTIN CALLARD:

N o I a m r e a d i n g a t th e b o t to m o f

t h e c o lu m n .
C H A I R P E R S O N : W h e r e i t s a y s i m p a c t – ju s t r e a d w h a t it s a y s w h e r e
10

y o u a r e r e a d in g ?
MR FRANCIS QUENTIN CALLARD:

I a m r e a d i n g t h e v e r y l a s t li n e

price used for evaluation.
C H A I R P E R S O N : O k a y a lr ig h t . T h e n f o r b i d d e r 1 3 2 ?
M R F R A N C I S Q U E N T I N C A L LA R D : .8 .
CHAIRPERSON : Ja, yes.
M R F R A N C I S Q U E N T I N C A L L A R D : A n d y o u w i ll n o t e th a t th is i s a f t e r
d e d u c ti n g th e i m p a c t o f T E .
C H A I R P E R S O N : Ye s , y e s .
MR FRANCIS QUENTIN CALLARD:
20

T h e y a r e n o w u s in g t h is p r ic e fo r

evaluation.
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : 3 2 . 8 .
CHAIRPERSON : Hm.
MR FRANCIS QUENTIN CALLARD:

W h i le h o l d i n g t h a t p r i c e in o u r

m i n d i f w e n o w g o l o o k a t p a g e 5 7 8 th a t w a s A n n e x u r e

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20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO: 65.
M R F R A N C I S Q U E N T I N C A L LA R D : 6 5
CHAIRPERSON : 65
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : P a g e 5 7 8 .
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ta b l e 5 .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L L A R D : A n d w e w il l s e e o n t h a t t a b l e i n th e
10

m i d d l e p r ic e p r e v io u s e v a lu a t e d p r ic e . A n d i t s a y s 3 2 .8 3 3 3 2 5 , 3 2 . 8 . I
w o u ld j u s t w i s h t o d e m o n s tr a t e t h e c o r r e l a ti o n b e t w e e n t h o s e t w o
fi g u r e s .
ADV MAHLAPE SELL O : Okay yes.
C H A I R P E R S O N : Ye s .
MR FRANCIS QUEN TIN CALLARD:

S o t h e fi g u r e w h i c h c o m e s f r o m

t h e C F E T e v a l u a t io n t e a m fi n d s i ts w a y i n t o t h i s f o r m a l d o c u m e n t to th e
lo c o m o t iv e s te e r in g c o m m i t t e e m e e t in g a s a b e s t a n d fi n a l o ffe r p r ic e .
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : I w a n t to m a k e t h a t c o r r e la t io n .
20

C H A I R P E R S O N : Ye s .
MR FRANCIS QUENTIN CALLARD : And then when it uses the words
p r i c e u s e d f o r e v a l u a t i o n a s a b e s t a n d fi n a l o ffe r p r ic e .
CHAIRPERSON : Hm.
MR FRANCIS QUENTIN CALLARD :

T h e n o r m a l r e a d in g I w o u l d p o s it

o f a b e s t a n d f in a l o ff e r is w h a t y o u s e e is n o w w h a t y o u g e tt i n g .

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20 MAY 2019 – DAY 96
C H A I R P E R S O N : I s th e u lt i m a t e n o t t o b e c h a n g e d , n o t t o b e a m e n d e d
b e f o r e e v a l u a t io n ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
CHAIRPERSON : Ja.
MR

FRANCIS

QUENTIN

CALLARD :

But

th e

–

w h ic h

w i ll

be

d e m o n s t r a t e d la t e r i s t h a t th is T E is a c t – T E i m p a c t p r ic e i s a c t u a ll y
added back.
C H A I R P E R S O N : Ye s .
MR FRANCIS QU ENTIN CALLARD:
10

S o t h i s i s n o t t h e a c tu a l p r ic e

w h ic h w e a r e g o i n g t o p a y f o r t h e s e lo c o m o tiv e s .
C H A I R P E R S O N : Ye s . O k a y.
M R F R A N C I S Q U E N T IN C A L LA R D :

It is posited as being best and

fi n a l o ffe r w h a t y o u s e e w h a t y o u g e t .
CHAIRPERSON : YEs.
M R F R A N C I S Q U E N T I N C A L L A R D : I t is n o t w h a t w e a r e a c t u a l ly g o i n g
t o p a y fo r t h o s e l o c o m o ti v e s .
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : A s i m i la r p o i n t h o l d s f o r b i d d e r 2 .
C H A I R P E R S O N : I s – I m e a n t h e o n e t h a t i s t h e b e s t a n d f i n a l o ff e r y o u
20

m e a n i t is w i t h o u t t h e T E f a c t o r ?
M R F R A N C I S Q U E N T I N C A L LA R D : It is w it h o u t t h e T E f a c t o r.
C H A I R P E R S O N : J a b u t y o u s a y it w i ll b e b r o u g h t b a c k la t e r ?
M R F R A N C I S Q U E N T I N C A L LA R D : B e b r o u g h t b a c k l a t e r.
CHAIRPERSON :

A n d p a r t o f th e p o i n t y o u i n te n d m a k in g w h ic h y o u

h a v e n o t n e c e s s a r i ly m a d e is y o u c a n n o t h a v e – y o u c a n n o t h a v e a

Page 207 of 247

20 MAY 2019 – DAY 96
p r i c e h i g h e r t h a n y o u r b e s t a n d fi n a l o ff e r ? Yo u r b e s t a n d fi n a l is t h e
la s t p r ic e ?
M R F R A N C I S Q U E N T IN C A L L A R D :

E x a c t ly t h a t p o i n t .

The normal

r e a d e r r e a d in g t h is .
CHAIRPERSON : Hm.
MR FRANCIS QUENTIN CALLARD : Would say thank you I assume that
is g o i n g to b e t h e p r ic e t h a t I a m g o i n g t o p a y ?
C H A I R P E R S O N : Ye s , y e s .
M R F R A N C I S Q U E N T I N C A L LA R D : T h e s m a ll e x c lu s i o n .
10

CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D : If I m a y r e fe r t o p o in t 9 .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : O n p a g e 5 7 9 .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L LA R D : W h ic h s a y s th is m e m o r a n d u m m u s t
b e r e a d i n c o n j u n c t i o n w i t h th e C F T F in a n c e r e p o r t d a t e d t h e 1 0
D e c e m b e r.
CHAIRPERSON : Hm.
MR FRANCIS QUENTIN CALLARD:

20

T h e n o r m a l r e a d e r o f th is r e p o r t

w o u ld n o t g o i n t o t h e d e p t h o f d e t a i l .
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : W h ic h w e h a v e j u s t b e e n h e r e .
C H A I R P E R S O N : Ye s , y e s .
M R F R A N C I S Q U E N T I N C A L L A R D : To p ic k u p th e n u a n c e s a r o u n d th is
pricing.

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20 MAY 2019 – DAY 96
C H A I R P E R S O N : Ye s , y e s .
M R F R A N C I S Q U E N T I N C A L LA R D : A n d w o u l d t a k e i t I s u b m i t .
CHAIRPERSON : Ja.
MR FRANCIS QUENTIN CALLARD :

A t f a c e v a l u e – th a n k y o u I r e a d

t h a t – th a t is t h e p r ic e w e a r e g o i n g to p a y w h e n in fa c t th a t is n o t t h e
case.
CHAIRPERSON : Ja, yes.
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t w e a r e a c tu a l ly g o i n g t o p a y.
C H A I R P E R S O N : Ye s , y e s .
10

A D V M A H L A P E S E L L O : O k a y.
CHAIRPERSON : Hm.
A D V M A H LA P E S E L L O : A n d t h e n y o u d o t h e s a m e c o r r e la t io n fo r t h e
d i e s e l lo c o m o t iv e s a t y o u r p a r a g r a p h 1 7 6 .
CHAIRPERSON :

B u t I t h o u g h t I s a w s o m e th i n g t h a t I t h o u g h t y o u

w o u ld c o m e t o .
A D V M A H L A P E S E L L O : Ye s C h a ir.
CHAIRPERSON :

T h a t I t h o u g h t M r C a l la r d w a s g o in g t o c o m e t o

s h o r tl y b e fo r e m o v i n g a w a y f r o m t h is . O k a y I th i n k i t h a s g o n e .
ADV MAHLAPE SELL O : Ag I hope we can…
20

CHAIRPERSON : It may come…
A D V M A H L A P E S E L L O : S o m e h o w g e t to a d d r e s s i t C h a ir.
CHAIRPERSON : It may come back.
M R F R A N C I S Q U E N T I N C A L LA R D : I w il l c o m e b a c k to m o r e …
CHAIRPERSON :

Yo u s e e th a t is w h y s o m e t i m e s w h e n I – w h e n

s o m e t h i n g o c c u r s to m y m in d I w a n t t o …

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : To d e a l w i t h i t i m m e d i a t e ly.
CHAIRPERSON :

To d e a l w i t h it th e r e a n d t h e n b e fo r e i t e s c a p e s ja .

Okay alright.
ADV MAHLAPE SELLO:

N o w i f – b e f o r e w e le a v e y o u r A n n e x u r e

6 5 5 7 8 i t s ta t e s a s i ts p u r p o s e to p r o v i d e t h e s t e e r i n g c o m m i t t e e w it h
a n u p d a t e o f th e r e s u l ts o f t h e b e s t a n d f i n a l o ff e r r e s p o n s e fr o m
b i d d e r s 1 a n d 2 . D o w e k n o w w h e n t h o s e b e s t a n d fi n a l o ffe r s c a m e in
a n d th is m e m o r a n d u m i s d a te d th e 1 5 J a n u a r y 2 0 1 4 ?
MR FRANCIS QUENTIN CALLARD :
10

M y a p o lo g i e s y o u r q u e s ti o n w a s

onto 65?
ADV MAHLAPE SELL O : 578?
M R F R A N C I S Q U E N T I N C A L LA R D : 5 7 8 .
A D V M A H L A P E S E L L O : T h a t m e m o r a n d u m w e ju s t – y o u ju s t t o o k u s
through.
M R F R A N C I S Q U E N T I N C A L LA R D : J a . J a .
ADV MAHLAPE SELL O : Annexure 65.
M R F R A N C I S Q U E N T I N C A L LA R D : A n n e x u r e 6 5 .
ADV MAHLAPE SELL O : Ja. I look at…
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.

20

A D V M A H L A P E S E L L O : A n n e x u r e 6 5 I s e e i t is d a t e d t h e 1 5 J a n u a r y
2014.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

I t is f r o m t h e c r o s s f u n c ti o n a l e v a l u a ti o n

team.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .

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20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

A n d i t i s g o i n g t o t h e 1 0 5 4 l o c o m o ti v e

steering committee?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

It has as it – it states as its purpose to

p r o v i d e t h e s t e e r i n g c o m m i t te e w i th a n u p d a t e o f th e r e s u l ts o f th e b e s t
a n d fi n a l o ffe r B A F O r e s p o n s e s f r o m b i d d e r s 1 a n d 2 .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H LA P E S E L L O :

O k a y. N o w y o u w i ll r e c a l l t h a t t h e r e p o r t w e

have been working through of the CFET Finance.
10

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : I s d a te d th e 1 0 D e c e m b e r 2 0 1 3 ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : A n d th a t is a t p a g e 6 4 0 .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:

T h is m e m o r a n d u m i s d a t e d a l m o s t a m o n th

la t e r th e 1 4 – 1 5 J a n u a r y 2 0 1 5 ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : M y q u e s t io n is , d o y o u k n o w w h e n t h e s e b e s t
a n d fi n a l o ffe r s w e r e r e c e iv e d th a t a r e r e fl e c t e d in t h is m e m o r a n d u m ?
20

M R F R A N C I S Q U E N T I N C A L L A R D : Ye s a n d I b e l i e v e t h a t I h ig h li g h t e d
t h a t w h e n I g a v e t h e t i m e l i n e o f e v e n ts w h ic h i f I m a y g o b a c k t o ?
ADV MAHLAPE SELLO:

O k a y.

MR FRANCIS QUENTIN CALLARD:

Of my – paragraph 157.8 of my

s t a te m e n t w h ic h is p a g e 3 8 . Th e – a n d th a t w a s o n th e 4 J a n u a r y 2 0 1 4
t h e r e w a s t h e r e q u e s t f o r t h e b e s t a n d f in a l o ff e r s B A F O w i t h a c lo s i n g

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20 MAY 2019 – DAY 96
d a t e o f 1 0 J a n u a r y.
A D V M A H L A P E S E L L O : O k a y. S o t h e y w o u ld h a v e b e e n r e c e iv e d b y
t h e 1 0 J a n u a r y a n d th e n th e y a r e f o l lo w e d b y t h i s m e m o r a n d u m o n t h e
1 4 J a n u a r y to t h e 1 0 6 4 s t e e r i n g – l o c o m o ti v e s t e e r i n g c o m m i t t e e .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CALLARD:

M a y I p o i n t o u t o n e f u r th e r p o i n t

o n th is . W h a t I h a v e i ll u s tr a te d o n b id d e r 1 , c o l u m n 1 a ls o a p p li e s t o
b i d d e r 2 . B u t r e m e m b e r i f y o u w o u ld r e c a l l w e w e r e t a l k i n g a b o u t t h e 2
10

m il li o n o d d d is c o u n t fr o m b i d d e r C S R t h a t d i ff e r e n t ia t io n b e t w e e n th e 5
m il li o n a n d t h e 3 m i ll io n .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D : C o u ld I d r a w o u r a t t e n t io n – c o u l d
w e g o h a v e a lo o k p l e a s e a t p a g e 5 8 0 o f – w h i c h is a g a i n s t il l t h e s a m e
annexure 65.

A n d p a g e 5 8 0 is a r e c o n c i li a ti o n b e t w e e n t h e B A F O

e v a l u a t e d p r ic e a n d th e p r e v i o u s e v a l u a t e d p r i c e .

Th e p r e v i o u s

e v a l u a t e d p r ic e w h ic h w e s e e t h e r e t h a t m i d d l e li n e f o r b i d d e r 2 .
ADV MAHLAPE SELL O : Before we do so.
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.
20

A D V M A H L A P E S E L L O : Ex c u s e m e M r C a l la r d p e r h a p s w e m i g h t – w e
w i ll m a k e a n o te . W e s h o u ld c o n s i d e r p r o v id i n g a m o r e l e g i b l e c o p y o f
580.
MR FRANCIS QUEN TIN CALLARD :

5 8 0 a p o l o g i e s th e r e is a l e g i b l e

copy at 582.
A D V M A H L A P E S E L L O : 5 8 2 . T h a n k y o u . T h e n le t u s w o r k t h r o u g h i t .

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u . I f w e m a y ta k e th e –
and

again

we

need

these

various

documents

open

before

us.

S u p p l e m e n t a r y 2 3 w h ic h w a s t h e r e c o n c il i a ti o n o f p r ic e w h ic h w a s th e
la s t p a g e o f t h e C F E T r e p o r t.

T h e s e c o n d c o lu m n p r ic e u s e d fo r

e v a l u a t i o n is 3 4 . 7 m il li o n r o u n d e d . T h a t p r i c e is t h e s a m e p r ic e a s a t
under bidder 2 of page 578.
C H A I R P E R S O N : D id y o u s a y i n s t e a d o f l o o k i n g a t 5 7 8 w e c a n l o o k a t
582?
M R F R A N C I S Q U E N T I N C A L L A R D : N o f ir s t 5 8 2 p l e a s e . I j u s t w i s h t o
10

e s t a b li s h t h e li n k a g e b e t w e e n …
ADV MAHLAPE SELLO:

M a y I M r C a ll a r d b e c a u s e I t h i n k it w a s i n

r e s p o n s e t o m y q u e s ti o n t h a t y o u r e f e r r e d t o 5 8 2 .

Yo u o r i g i n a l ly

r e fe r r e d u s to p a g e 5 8 0 . I m a d e th e p o in t t h a t 5 8 0 i s n o t a v e r y l e g i b l e
c o p y.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : A n d Mr C a l la r d in d i c a t e d t h a t a m o r e l e g i b l e
c o p y s h o u ld a p p e a r C h a i r i n y o u r – a t y o u p a g e 5 8 2 .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
C H A I R P E R S O N : O h y e s b u t I th o u g h t t h a t h e w a s s a y in g t h a t o n e is a
20

b e t t e r c o p y o f 5 7 8 . T h a t is a c tu a lly n o t w h a t h e s a i d h e y ?
ADV MAHLAPE SELL O : No it is a better copy of 580.
C H A I R P E R S O N : R ig h t . O f 5 8 0 .
A D V M A H L A P E S E L L O : Ye s C h a i r.
C H A I R P E R S O N : O k a y.
MR FRANCIS QUENTIN CALLARD :

If I m a y I w o u l d l ik e t o r e f e r to

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20 MAY 2019 – DAY 96
three separate pages.
A D V M A H L A P E S E L L O : O k a y.
C H A I R P E R S O N : N o , n o I t h in k I h a d – I h a d u n d e r s t o o d c o r r e c t ly. J a
n o , n o , n o , I – n o w I u n d e r s t a n d t h e [ in d i s t in c t ] .
A D V M A H L A P E S E L L O : Th a n k y o u C h a ir.
C H A I R P E R S O N : I g o t c o n f u s e d i n th e p r o c e s s . Ye s n o w y o u w a n t u s
t o l o o k a t w h a t?
M R F R A N C I S Q U E N T I N C A L LA R D : T h e f i r s t p a g e
CHAIRPERSON : Of?
10

M R F R A N C I S Q U E N T I N C A L LA R D : Is th e s u p p l e m e n t a r y 2 3 .
C H A I R P E R S O N : Ye s .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L L A R D : R e c a l l th a t th is is t h e ta b le o f t h e
C F E T r e p o r t o f th e 1 0 D e c e m b e r.
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

T h e s e c o n d c o l u m n t h e l a s t l in e

price used for evaluation.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : Fo r b i d d e r 2 C S R 3 4 .7 m i ll io n .
20

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : T h a t fi g u r e i s t h e s a m e fi g u r e th a t
a p p e a r s o n p a g e – i n th e r e p o r t t o th e lo c o m o t iv e s te e r in g c o m m i t t e e
p a g e 5 7 8 t h e ir r e p o r t o f t h e 1 5 J a n u a r y a s t h e p r e v i o u s e v a l u a t e d
price.
A D V M A H L A P E S E L L O : O k a y.

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L L A R D : W e h a v e a c o r r e l a ti o n b e t w e e n t h is
p r i c e a t t h e 1 0 J a n u a r y a n d w h a t th e y r e f e r t o a s th e p r e v i o u s
e v a l u a t e d p r ic e .
A D V M A H L A P E S E L L O : O k a y.
MR FRANCIS QUENTIN CALLARD:

Th e r e p o r t o f th e 1 5 J a n u a r y

r e fe r r e d t o t h e f ig u r e a b o v e i t g iv e s t h e c u r r e n t w h a t t h e y c a ll B A F O
e v a l u a t e d p r ic e o f 2 .4 m i ll io n r o u n d e d .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : T h e r e i s a d i ff e r e n c e o f 2 . 2 m il li o n .
10

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

If w e c o u l d tu r n h o l d i n g t h a t

d i ff e r e n c e o f 2 . 2 m i ll io n p l e a s e – i f w e c o u l d t u r n to t h e l e g i b l e c o p y o f
t h e r e c o n c i li a ti o n w h ic h is p a g e 5 8 2 .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QU ENTIN CALLARD:

T h i s is a r e c o n c il i a t i o n o f t h e

d i ff e r e n c e b e t w e e n t h e f ig u r e i n s u p p l e m e n ta r y 2 3 a n d t h e B A F O p r ic e
here.

W e w il l s e e th e 3 4 . 7 m il li o n o n t h e s e c o n d c o l u m n 1 , 2 , 3 th e

f o u r t h fi g u r e fr o m t h e b o tt o m t h e 3 f 4 7 1 6 .
A D V M A H L A P E S E L L O : Ye s .
20

MR FRANCIS QUENTIN CALLARD:

P r ic e u s e d f o r e v a l u a ti o n b e f o r e

BAFO.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L L A R D : W e w i ll s e e t h e B A F O w h ic h th e y
in c l u d e h e r e a t b i d d e r 2 a n d i t i s m a r k e d t h e r e i n b o l d j u s t a b o v e i t a t
t h e 2 – 3 2 . 4 m il li o n .

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : Ye s .
M R FR A N C I S Q U E N T I N C A L L A R D :

Th e i m m e d ia t e t a b l e b e l o w th a t

g iv e s u s t h e d i ff e r e n c e b e tw e e n t h o s e t w o p r i c e s .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T IN C A L L A R D : Yo u w ill – m a y r e c a l l t h a t w h e n w e
s p o k e o n t h e C S R a n d t h e i m p a c t o f T E t h e r e w a s t h e c o n f u s io n
b e t w e e n th e 3 .8 m i ll io n a n d th e 5 m i ll io n a n d t h e 2 m il li o n a n d w h e t h e r
t h a t w a s a d is c o u n t o r n o t a n d s h o u ld b e t a k e n i n t o a d i s c o u n t . I w o u ld
ju s t li k e t o h ig h li g h t h e r e t h a t t h e d i ff e r e n c e is n o w m a d e u p o f a
10

d is c o u n t o n p r i c e .

T h a t 2 . 0 1 m i ll io n f in d s i ts w a y i n – f i n d s i t s w a y

b a c k h e r e a s a d is c o u n t o n t h e B A F O p r i c e .
A D V M A H L A P E S E L L O : S o t h a t is t h e d i s c o u n t – i t i s t h e d is c o u n t o n
t h e p r i c e u s e d f o r e v a l u a ti o n t o a r r iv e a t t h e B A F O p r ic e ?
MR FRANCIS QUENTIN CALLARD:

To a r r iv e a t t h e B A F O p r ic e

p r e s e n t e d t o th e b o a r d .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

T h e fi r s t w h ic h i s o n t h a t t a b l e

u n d e r b i d d e r 2 3 2 . 4 m i ll i o n .
A D V M A H L A P E S E L L O : Ye s .
20

MR FRANCIS QUENTIN CALLARD:

W h ic h is p r e s e n t e d a s t h e B A F O

e v a l u a t e d p r ic e .
A D V M A H L A P E S E L L O : Ye s .
MR FRANCIS QUENTIN CALLARD:

R e a d i n g th r o u g h t h a t c o l u m n i t

s a y s t h e r e is a d i ffe r e n c e o f 2 .2 m i ll io n .
A D V M A H L A P E S E L L O : Ye s .

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D :

2 . 2 5 m ill i o n .

What I wanted to

p o i n t o u t w a s t h a t d i ff e r e n c e o f 2 . 2 5 m il li o n i s m a d e u p in t e r a li a o f th e
2 .0 1 m il li o n .
A D V M A H L A P E S E L L O : O k a y.
MR

FRANCIS QUENTIN

C A L LA R D :

That came

through in the

c o n fu s i o n o f t h e i m p a c t o f T E .
C H A I R P E R S O N : I s th is w h e r e y o u s a y e a r li e r th e y d e d u c t e d a n a m o u n t
t h a t th e y s a id w o u l d h a v e to b e d e d u c t e d i f th e y d i d n o t u s e T E ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
10

C H A I R P E R S O N : B u t n o w y o u a r e s a y in g t h e y u p – t h e y h a v e b r o u g h t i t
b a c k n o w. Is t h is w h e r e y o u s a y th e y h a v e b r o u g h t i t b a c k ?
M R F R A N C I S Q U E N T I N C A L LA R D : N o .
CHAIRPERSON : Not yet?
M R F R A N C I S Q U E N T I N C A L L A R D : I a m g iv i n g a m o r e – s li g h t ly m o r e
c o m p lic a t e d p i c tu r e .
C H A I R P E R S O N : Ye s .
MR FRANCIS QUENTIN CALLARD:

For CSR when they – when there

w a s c o n f u s io n a r o u n d t h e p r ic e t o d e d u c t f o r th e i m p a c t e d T E .
C H A I R P E R S O N : Ye s .
20

M R FR A N C I S Q U E N T I N C A L L A R D :

W h e th e r i t w a s 3 m i ll io n r o u n d

fi g u r e s 3 . 4 m il li o n o r 5 . S o m e th i n g m i lli o n .
C H A I R P E R S O N : J a , ja .
MR FRANCIS QUENTIN CALLARD:

A n d th r o u g h d is c u s s i o n s w i t h

S u p p ly C h a i n S e r v ic e s a n d t h e v a r io u s b o d i e s i t s a i d u s e t h e 3 .4
m il li o n .

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20 MAY 2019 – DAY 96
CHAIRPERSON : Hm.
M R FR A N C I S Q U E N T I N C A L L A R D :

A n d t h e 2 m il li o n w a s n o t ta k e n

in t o a c c o u n t .
CHAIRPERSON : Hm.
MR FRANCIS QUENTIN CALLARD:

H o w e v e r n o w s u b s e q u e n tly la t e r

a ft e r w e h a v e r e q u e s te d a n u p d a t e d B A F O o n t h e 4 J a n u a r y i t f in d s i t
w a y b a c k i n t o t h e fi g u r e h e r e a s t h i s 2 . 0 1 m il li o n a s a d is c o u n t .
CHAIRPERSON : Hm.
M R F R A N C I S Q U E N T I N C A L L A R D : S o in i ti a l ly b e e n t o ld t o i g n o r e i t i t
10

n o w fi n d s i t w a y b a c k h e r e a s a d is c o u n t.
C H A I R P E R S O N : A n d th e p r o b le m is it b e i n g g i v e n a s a d is c o u n t .
MR FRANCIS QUENTIN CALLARD:

I t is h e r e n o w r e fl e c t e d a s a

d is c o u n t .
C H A I R P E R S O N : C r e a ti n g th e i m p r e s s io n t h a t w h a t Tr a n s n e t w o u ld b e
g e t t in g h e r e a s – t h i s d is c o u n t .
MR FRANCIS QUENTIN CALLARD :

Whether this is a real or a

fi c t i ti o u s d is c o u n t is …
CHAIRPERSON :

B u t t h a t i s [i n d is t in c t] b u t y o u – i s p a r t o f t h e p o i n t

t h a t y o u a r e m a k in g t h a t i t c r e a t e s th a t i m p r e s s i o n t h a t Tr a n s n e t w il l
20

b e n e fi t b e c a u s e th e r e is t h i s d is c o u n t ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
C H A I R P E R S O N : O k a y.
A D V M A H L A P E S E L L O : A n d ju s t f o r th e r e c o r d a n d p l e a s e c o n f ir m f o r

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20 MAY 2019 – DAY 96
m e t h a t d e b a t e o f 5 .3 m il li o n a n d 3 . 4 m i ll i o n w o u l d – fo r th e T E i m p a c t
t h a t d is c u s s i o n i s h e a r d in t h e r e p o r t a t p a g e 6 5 2 ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t …
ADV MAHLAPE SELLO:

A n d s e c o n d – t h ir d – s e c o n d b u ll e t p o in t o f

t h a t p a g e w h e r e i t is i n d ic a te d t h a t t w o p r i c e s w e r e r e c e iv e d o f 5 . 8 a n d
3 .4 a n d a d is c u s s i o n t h e n f o l lo w s t h e r e a f t e r a n d Tr a n s n e t o r t h e t e a m
d e c i d e s to u s e t h e 3 . 4 m il li o n ? A t p a g e …
M R F R A N C I S Q U E N T I N C A L LA R D : A b s o l u te ly c o r r e c t .
ADV MAH LAPE SELL O: 652.
10

M R F R A N C I S Q U E N T I N C A L LA R D : 6 5 2 a n d t h e s e c o n d b u l le t p o in t i t
c o n fir m s

t h a t d is c u s s i o n

e x a c tl y

where

the

b id d e r

2

may

have

s u b s t a n t ia ll y in c l u d e d th is q u o t e “ d is c o u n t” u n q u o t e p o r t io n o f 2 .0 1 –
2 .0 1 m il li o n i n t o th e ir p r ic e th e r e b y h a v i n g t h e p o t e n ti a l i m p a c t.
A D V M A H L A P E S E L L O : S o i t s a y s th e r e i t w a s fir s t ly 5 . 4 th e n 3 . 8 a n d
t h e y d e s c r i b e d t h e d i ffe r e n c e a s a d is c o u n t a n d t h e y d o s o i n th e t h ir d
b u ll e t p o in t a n d th a t d is c o u n t is 2 .0 1 0 – 2 m il li o n o d d .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : N o w it is th a t 2 m il li o n d is c o u n t a n d I s a y th a t
in in v e r t s t h a t f i n d i ts w a y t o p a g e 5 8 2 a n d i s r e f l e c te d a s a d is c o u n t o n
20

the price?
M R FR A N C I S Q U E N T I N C A L L A R D :

A n i d e n ti c a l fi g u r e is r e fl e c t e d

t h e r e a s a d is c o u n t y e s .
A D V M A H L A P E S E L L O : Th a n k y o u . T h a n k y o u C h a ir. N o w th is r e p o r t
I s e e a t 5 7 8 A n n e x u r e 6 5 w h e r e y o u o r i g in a l ly to o k u s .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : A t p a g e 5 7 9 i t r e fl e c ts a n u m b e r o f s ig n a tu r e s
a n d a n u m b e r o f n a m e s a n d a r e th o s e th e m e m b e r s o f th e c r o s s
f u n c t i o n a l e v a l u a ti o n t e a m ?
M R FR A N C I S Q U E N T I N C A L L A R D :

I u n d e r s t a n d t h o s e t o b e th e

m e m b e r s o f t h e c r o s s f u n c t i o n a l e v a l u a t io n te a m b y t h e ir s i g n a t u r e s t o
t h is r e p o r t .
A D V M A H L A P E S E L L O : O k a y. S o t h a t w o u l d b e M r M o h a m m e d M o o l a ,
M r Yu s u f L a h e r, Mr Z u n a id Va lly, M r D a n i e S m i t , M r T h a b o S e a p i a n d
M r Ts i e t s i T l a l e ts i ?
10

M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : A n d i t is th a t t e a m t h a t is th e n s e e k in g – i s it
– is i t s e e k i n g a p p r o v a l o r i t is t h is s u b m i t t in g i n fo r m a ti o n t o t h a t
C o m m i t t e e ? Is i t u p d a t in g th e c o m m i t t e e o n p r o g r e s s …
M R F R A N C I S Q U E N T I N C A L LA R D : By – b y …
A D V M A H L A P E S E L L O : I n th e n e g o t i a t i o n s ?
M R F R A N C I S Q U E N T I N C A L LA R D :

By

the

purpose

of

th is

m e m o r a n d u m i t w a s t o p r o v i d e th e S t e e r i n g C o m m i t t e e w it h a n u p d a t e
o f t h e r e s u l ts o f t h e b e s t a n d f in a l o ff e r B A F O r e s p o n s e f r o m b i d d e r s
o n e a n d tw o f o r t h e p u r p o s e o f th is r e p o r t a n d h o w t h e l o c o m o ti v e
20

c o m m i t t e e - S t e e r in g C o m m i t t e e m a y t a k e t h is f u r th e r.
A D V M A H L A P E S E L L O : O k a y. W h a t th e n tr a n s p ir e s a f t e r t h is m e m o is
s u b m i tt e d ?
M R F R A N C I S Q U E N T I N C A L LA R D : I t is n o t a – a f te r th is m e m o r a n d u m
is s u b m i tt e d it f i n d s i t s w a y i n t o a m e m o r a n d u m t o t h e B o a r d
A c q u is i t io n s a n d D i s p o s a l s C o m m i t t e e M e e t in g w h ic h t a k e s p l a c e o n

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20 MAY 2019 – DAY 96
2 4 J a n u a r y.
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

A n d t h e s e fi g u r e s fi n d t h e ir w a y

t h r o u g h i n t o th a t m e m o r a n d u m .
A D V M A H L A P E S E L L O : A n d y o u d o n o t h a v e th a t m e m o r a n d u m a s a n
a n n e x u r e t o y o u r s ta t e m e n t?
M R F R A N C I S Q U E N T I N C A L LA R D : I d id n o t in c l u d e a s a n a n n e x u r e to
m y s ta t e m e n t .
ADV MAHLAPE SELLO: So …
10

M R F R A N C I S Q U E N T I N C A L LA R D : It is a v a i l a b l e b u t i t is n o t in .
A D V M A H L A P E S E L L O : Ye s . S o w h i c h e v e r w i t n e s s w e t h e n n e x t d e a l
w i t h w e t a k e t h is – th is r e p o r t fr o m t h is ju n c t u r e a n d s e e h o w B A D C
d e a lt w i t h i t a t t h a t m e e ti n g o f 2 4 J a n u a r y.
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELL O: Okay and if we m ay proceed.
M R F R A N C I S Q U E N T I N C A L LA R D :

Thank you.

I w o u l d li k e f o r a

m o m e n t to p a s s o v e r m y p o i n ts 1 7 5 . 2 …
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : A n d 1 7 6 . 2 b e c a u s e th e y d e a l w i th
20

s o m e d e t a il e d s p r e a d s h e e ts a n d I w o u ld r a th e r d e a l w i t h t h e m a s a n
e n t i ty …
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : R a t h e r t h a n i n tr o d u c e th e m n o w.
A D V M A H L A P E S E L L O : Th a t i s f in e .
M R F R A N C I S Q U E N T I N C A L LA R D :

B u t t o a d d r e s s th a t – t h e s i m i la r

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20 MAY 2019 – DAY 96
is s u e o f T E a c r o s s t h e d i e s e l b i d d e r s w h il e w e a r e d e a li n g w i t h t h i s .
So if I may come back to those later and go to 177.
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

W h a t I c o m m e n t e d e a r li e r o n

b i d d e r o n e fo r d i e s e l lo c o m o t iv e s n o t b e in g s u b je c t t o t h e i m p a c t o f
p r i c i n g . I a m n o t s u r e i f I s p e c i fi c a ll y s t a t e d th a t b u t if I c o u l d j u s t t a k e
you through please to 170 – my – paragraph 170 page 44.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :
10

T h e a p p li c a t io n o f T E p r i c i n g

m e t h o d o l o g y f o r t h e 4 6 5 d i e s e ls fo ll o w e d a s i m il a r p a t te r n a n d w e h a v e
e ffe c t iv e l y d e a l t w i t h t h a t t a b l e …
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

A n d t h e in c o n s is t e n c i e s o f b id d e r

t w o in t h a t t a b le .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

C o m in g t o b i d d e r o n e f o r t h e

d i e s e l lo c o m o t iv e s n o t b e i n g s u b j e c t t o i m p a c t a t T E p r i c i n g a n d I
b e li e v e t h i s c o u l d b e a n in c o n s is t e n t a p p l ic a t i o n o f t h i s p r e s c r ip t io n
a c r o s s t h e b id d e r s .
20

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

P e r 1 7 8 w e h a v e a l m o s t e x a c tl y

t h e – I s e t o u t e x a c tly th e s a m e p r o c e s s a s I d i d fo r t h e e l e c tr i c a ls a n d
I m a y b e p e r m i tt e d n o t o h a v e t o g o t h r o u g h t h a t a g a i n .
A D V M A H L A P E S E L L O : A b s o lu t e l y.
M R F R A N C I S Q U E N T I N C A L LA R D : I w o u l d t h e n g o t o p a r a g r a p h 1 7 9 .

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

W h e r e C N R w a s b i d d e r o n e fo r

d i e s e l s . A n e x tr a c t f r o m t h e ir R F P s u b m i s s io n i s s e t o u t b e l o w …
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : A n d t h is …
A D V M A H L A P E S E L L O : C o u l d y o u r e a d it i n t o t h e r e c o r d p l e a s e ?
M R F R A N C I S Q U E N T I N C A L LA R D : I w i ll r e a d i t i n t o t h e r e c o r d . Th is
is e x t r a c t e d fr o m t h e i r R F P s u b m i s s io n a n d p a r a g r a p h 2 . 1 :
“ L o c a l c o n t e n t p la n s f o r s u p p li e r a n d c o m p o n e n ts .”
10

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

“ R e i te r a t in g

our

c o m m i t m e n t t o Tr a n s n e t’s S u p p li e r D e v e l o p m e n t
r e q u ir e m e n t s it n e e d s t o b e m e n t io n e d th a t t h e C N R
C o n s o r t iu m h a s e n te r e d i n t o a n a g r e e m e n t w i t h
Tr a n s n e t E n g i n e e r in g a s it s m a j o r lo c a l S u p p li e r
D e v e l o p m e n t ( S D ) p a r t n e r fo r t h e m a n u f a c t u r e o f
certain

c o m p o n e n ts

and

th e

a s s e m b ly

of

th e

lo c o m o t iv e s a ft e r d e l iv e r y o f a n i n it i a l q u a n ti ty o f 2 0
f u ll y b u il t u p u n i ts .
20

B a s e d o n t h is a b o v e t h e

a s s e r t io n b y S u p p l y C h a in S e r v ic e s t h a t b id d e r o n e
n o t s p e c i fy t h e u s e o f T E a s m a i n s u b c o n tr a c t o r i s
in c o r r e c t .”
A D V M A H L A P E S E L L O : A n d th a t is a c o n c l u s i o n y o u d r a w w h e n – w e
did not work through paragraph 178.
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y a n d th a t …

Page 223 of 247

20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

Where you give reference to where CFET

in d i c a t e d t h a t C N R h a d n o t – h a d n o t s p e c i fi e d T E a s a s u b c o n tr a c t o r
a n d i n th is r e g a r d y o u r e fe r a s t o p a g e 1 2 o f A n n e x u r e 8 4 r e a d w i t h
page 691?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t a n d …
ADV MAHLAPE SELLO:

S e c o n d b u ll e t p o i n t i f y o u c o u ld h a v e r e g a r d

thereto.
M R F R A N C I S Q U E N T I N C A L LA R D : A n d i f I m a y j u s t r e a d t h a t a s w e ll
b e c a u s e i t is th e p e r t in e n t p a r t o f t h is ?
10

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

On page 12 of Annexure 84 –

1 0 D e c e m b e r 2 0 1 3 r e p o r t o f t h e C r o s s F u n c ti o n a l E v a lu a ti o n Te a m o n
t h e l o c o m o t iv e t e n d e r e v a l u a t io n f o r t h e s u p p l y o f 4 6 5 n e w d i e s e l
lo c o m o t iv e s u n d e r th e h e a d in g o f “ U s i n g T E a s a M a i n S u b c o n tr a c to r
“ I n te r A li a ” ” s t a t e s : t h e b u l l e t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : “ S u p p ly C h a i n S e r v i c e s –
SCS – however advised CFT Finance that the
s u p p li e r d e v e l o p m e n t fi le s s u b m i tt e d b y b i d d e r s
20

in d i c a t e d t h a t b id d e r o n e – r e a d C N R – d i d n o t
s p e c i f y th e u s e o f T E a s a m a in s u b c o n tr a c t o r a n d
t h is c o u l d h a v e a p o t e n t ia l p r ic e a d ju s t m e n t …”
ADV MAHLAPE SELLO: Huh-uh.
CHAIRPERSON :
M R F R A N C I S Q U E N T I N C A L LA R D :

“ … i m p lic a ti o n .

Page 224 of 247

S u p p ly

20 MAY 2019 – DAY 96
C h a in S e r v i c e s a ls o m e n ti o n e d t h a t b i d d e r s w e r e
lik e l y t o m a k e d i ff e r e n t a s s u m p t io n s in t h e u s e o f
T E a s m a i n s u b c o n t r a c t o r i n c lu d i n g t h e p e r c e n t a g e
t h a t w o u l d b e s u b c o n tr a c te d .

T h e s e a s s u m p t io n s

w e r e n o t s p e c i fi e d b y T F R i n t h e R F P p r o c e s s a n d
c o u l d d i ff e r s i g n i f ic a n t ly b e t w e e n b id d e r s .”
T h a t is m y b o l d .
ADV MAHLAPE SELLO:

Ye s .

S o i f I m a y t h a t i s w h a t th e r e p o r t

c la i m e d ?
10

M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELL O: And what you seek to draw attention to at 179
is t h a t c o n tr a r y t o w h a t t h e r e p o r t s u g g e s t s C N R h a d a c t u a ll y …
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : I n d ic a t e d T E a s a s u b c o n tr a c t o r ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:

A n d i n d i c a t e d t h a t i t h a s c o n c lu d e d – h a s

e n t e r e d i n t o a c o n s o r t iu m w i th T E t o p a r t n e r o n l o c a l s u p p l ie r
development?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t a n d …
20

A D V M A H L A P E S E L L O : A n d y o u d r a w y o u r c o n c lu s i o n a t 1 8 0 .
M R F R A N C I S Q U E N T I N C A L LA R D :

And my conclusion based on the

above:
“ T h e r e p o r te d a s s e r ti o n b y S u p p ly C h a i n S e r v ic e s
t h a t b i d d e r o n e d i d n o t s p e c i fy th e u s e o f T E a s a
m a in s u b c o n t r a c t o r is i n c o r r e c t .”

Page 225 of 247

20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : N o w t h a t e r r o r – if i t i s a n e r r o r – b y C F E T o f
w h a t r e l e v a n c e is it t o t h is w h o l e p r o c e s s i n t h e d ie s e l e v a l u a t io n ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h e r e l e v a n c e o f t h is i s t h a t b i d d e r
o n e – C N R w e r e n o t a s k e d t o g iv e – p r o v i d e t h e i m p a c t o f n o t u s in g T E
a s a m a i n s u b c o n tr a c to r. U n li k e o t h e r b i d d e r s w h o h a d s p e c if i e d th e y
w e r e u s i n g T E t h e y w e r e a s k e d to p r o v i d e a n i m p a c t a s w e h a v e s e e n
in th e t a b l e - p r e v io u s ta b le o f b i d d e r s o n e , t w o a n d e t c e t e r a b u t b i d d e r
o n e w a s n o t a s k e d f o r.
ADV MAHLAPE SELL O: Please go ahead.
10

M R F R A N C I S Q U E N T I N C A L LA R D :

Fr o m t h i s c l e a r s t a t e m e n t in th e i r

R F P th a t t h e y w e r e u s in g T FR a s a m a i n s u b c o n t r a c t o r i t is u n u s u a l
a n d I c a n n o t e x p l a i n w h y t h e y w e r e n o t a s k e d to s u b m i t t h e s a m e
c la r i fi c a t io n th a t th e o t h e r b id d e r s h a d b e e n a s k e d w h e n th e y c l e a r ly
s a i d h e r e t h e y w e r e u s i n g T E a n d t h is i s t h e p o i n t t h a t I w a s m a k in g
t h a t th is is a n i n c o n s is t e n t a p p lic a ti o n o r in c o n s is t e n t ly a p p l y i n g t h e
p r e s c r i p t i o n o f T E a c r o s s d ie s e l b id d e r s …
ADV MAHLAPE SELLO: So …
M R F R A N C I S Q U E N T I N C A L LA R D :

A n d t h a t is t h e fir s t p o in t a r o u n d

t h is .
20

A D V M A H L A P E S E L L O : Th e fa il u r e to a s k C N R to c l a r i f y – C N R , y e s .
M R F R A N C I S Q U E N T I N C A L LA R D : C N R .
A D V M A H L A P E S E L L O : Is th a t C N R w a s a d j u d ic a te d o n a h i g h e r p r ic e
w h ic h r e fl e c t e d a T E c o m p o n e n t a n d w a s n o t g iv e n t h e o p p o r t u n i ty t o
d e d u c t th e T E c o m p o n e n t f r o m i ts p r ic e to – s o a s t o d e t e r m i n e a p r ic e
f o r e v a lu a ti o n ?

Page 226 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : If I m a y …
ADV MAHLAPE SELLO:

A l o n g w i th th e o th e r b id d e r s w h o h a d u s e d

TE.
M R F R A N C I S Q U E N T I N C A L LA R D : I f I m a y r e fl e c t t h a t . C E w e r e th e n
e v a l u a t e d i n t h e C F E T R e p o r t o n th e i r o r i g in a l p r ic e . T h a t t h e ir o r i g i n a l
p r i c e w a s s u b s t a n ti a l ly h i g h e r th a n t h e o t h e r p r ic e s s o b e i t b u t t h e y
w e r e n o t a s k e d o r t h e y w e r e n o t g iv e n – a s k e d a n d / o r g i v e n t h e s a m e
c o n s i d e r a ti o n a s th e o t h e r b id d e r s t o s t a t e t h e i m p a c t o f th e i r T E p r ic e
a n d th a t w a s t h e i n c o n s is t e n c y t h a t I r e f e r r e d t o .
10

A D V M A H L A P E S E L L O : N o w g o i n g b a c k t o t h e p o i n t I th i n k t h e C h a ir
a s k e d e a r li e r th a t – y o u k n o w – e n g a g e m e n t y o u h a d w i t h t h e C h a ir.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:
p r e j u d ic e o f C N R .

Yo u c o n c lu d e t h a t t h e – t h i s a c te d t o th e

D o y o u d r a w th a t c o n c l u s io n – t h i s i n c o n s i s t e n t

a p p lic a ti o n o f t h e T E i m p a c t ?
M R F R A N C I S Q U E N T I N C A L LA R D : I t m a y h a v e a c t e d t o t h e p r e ju d i c e
o f C N R . I f C N R w e r e t o h a v e c o m e b a c k a n d s a i d t h e r e is n o i m p a c t o n
m y p r ic e ( i n d i s ti n c t) a s o n e o f t h e e l e c tr ic a l b i d d e r s d i d .
A D V M A H L A P E S E L L O : Ye s .
20

M R F R A N C I S Q U E N T I N C A L LA R D :

I t w o u l d n o t b e t o t h e ir p r e j u d i c e .

I f t h e y s a i d th a t T E w a s g o i n g t o b e c h e a p e r i t w o u l d h a v e b e e n
p r e j u d ic ia l – s o r r y – i t w o u ld h a v e b e e n – w h ic h e v e r o n e it is g o in g to
be.
A D V M A H L A P E S E L L O : Ye s . It is l a t e i n t h e d a y.
C H A I R P E R S O N : W e l l p r e ju d ic i a l o r n o n - p r e j u d ic i a l .

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.
C H A I R P E R S O N : Pr e ju d i c i a l o r n o n - p r e j u d ic i a l .
M R F R A N C I S Q U E N T I N C A L LA R D :

I c o u l d h a v e b e e n p r e ju d i c i a l o r

n o n - p r e ju d i c i a l d e p e n d i n g o n t h e a n s w e r. I f t h e a n s w e r h a d b e e n a s
p e r w h a t t h e ( i n d is ti n c t) t h e r e is n o i m p a c t .

It would have had no

i m p a c t o n t h a t p r ic e .
A D V M A H L A P E S E L L O : O k a y. N o w j u s t r e m in d u s a s f a r a s t h e d i e s e l
lo c o m o t iv e s a r e c o n c e r n e d w h o w e r e t h e s u c c e s s f u l b id d e r s t h e r e ?
M R F R A N C I S Q U E N T I N C A L LA R D :
10

Th e s u c c e s s f u l b i d d e r s w e r e C N R

a n d G e n e r a l E l e c tr ic .
A D V M A H L A P E S E L L O : O k a y. S o c l e a r l y i t d o e s n o t s e e m th a t e v e n
t h a t in c o n s is t e n t a p p li c a t io n o f th e T E i m p a c t d o e s n o t s e e m t o h a v e
p r e j u d ic e d C N R .
M R F R A N C I S Q U E N T I N C A L LA R D : N o t a t th a t s t a g e .
ADV MAHLAPE SELLO:

O k a y.

O n t h e i s s u e o f in c o n s is t e n c i e s

o v e r l e a f y o u t h e n w a n t to t a l k a b o u t i n c o n s i s t e n c ie s a g a i n o n t h e
in t e r p r e t a ti o n o f B A F O a c r o s s t h e d i e s e l b i d d e r s ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t , y e s .
ADV MAHLAPE SELLO:
20

O k a y. T h e n y o u c a n ta k e u s fr o m p a r a g r a p h

181.
M R F R A N C I S Q U E N T I N C A L LA R D :

1 8 1 a n d a ll t h e d o c u m e n t a ti o n in

t h is s u b s e c ti o n w a s t h r o u g h M N S w i t h th e e x c e p ti o n o f A n n e x u r e 6 6 .
A D V M A H L A P E S E L L O : O k a y. Yo u d o – s o r r y – y o u d id in d ic a t e th a t
N N S e n g a g e d y o u t o p r o v id e a s s is t a n c e in t h e ir i n v e s t ig a ti o n ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .

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20 MAY 2019 – DAY 96
ADV MAHLAPE SELLO:

S o a r e y o u s u g g e s t in g y o u – y o u b e c a m e

a w a r e o f t h e s e d o c u m e n ts i n th a t p r o c e s s – d u r in g t h e c o u r s e o f t h a t
process?
M R F R A N C I S Q U E N T I N C A L LA R D : In t h e c o u r s e o f th a t p r o c e s s .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

I b e c a m e a w a r e o f th e e x is t e n c e

a n d th e i m p o r t a n c e o f t h e s e d o c u m e n t s , y e s .
A D V M A H L A P E S E L L O : A lr ig h t . Yo u m a y p r o c e e d .
M R F R A N C I S Q U E N T I N C A L LA R D : T h a n k y o u .
“It was on 20 December 2013 that CNR and the

10

o th e r d ie s e l b id d e r s w e r e r e q u e s t e d t o p r o v i d e a
b r e a k d o w n o f t h e i r R F P – A n n e x u r e E – c o s ts .”
W h i c h is A n n e x u r e 1 0 1 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

May we just turn to Annexure 101

please?
A D V M A H L A P E S E L L O : Ye s . T h a t w e f in d a t p a g e 7 9 1 .
M R F R A N C I S Q U E N T I N C A L LA R D :

P a g e 7 9 1 a n d t h is is t h e le t t e r to

C N R – th is ti m e w e h a v e t h e le t t e r t o C N R M r C h a ir. T h e le t t e r i s d a t e d
20

2 0 D e c e m b e r 2 0 1 3 . I t is a d d r e s s e d to …
C H A I R P E R S O N : T h e le t t e r i s o n w h a t p a g e ?
M R F R A N C I S Q U E N T I N C A L LA R D : 7 9 2 .
ADV MAHLAPE SELL O: 792.
CHAIRPERSON : 792?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .

Page 229 of 247

20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : A n n e x u r e 1 0 1 C h a ir.
C H A I R P E R S O N : T h a n k y o u . Ye s y o u m a y p r o c e e d .
M R F R A N C I S Q U E N T I N C A L LA R D :

T h a n k y o u - a n d i t a s k s fo r a n

e x p l a n a t io n o f th e i r – t h e A n n e x u r e E c o s ts p e r t h e ir R F P.

N o w th e

A n n e x u r e E is a d o c u m e n t w h i c h a ll th e b id d e r s h a v e t o f ill i n , in th e ir
R F P a n d i t d e t a i ls c e r t a in c o s ts u n d e r th e h e a d i n g s w h i c h w e h a v e h e r e
b e i n g t h e ir m a n p o w e r c o s t s , fa c t o r y o v e r h e a d s - w h ic h i n c lu d e s r e n ta l ,
d e p r e c ia t io n a n d a m o r tis a ti o n , u ti li t y c o s t s , c o n s u m a b le s e tc e te r a - a n d
t h ir d l y a d m i n is tr a t iv e o v e r h e a d s a n d m a r k - u p w h i c h in c l u d e s m a r k e ti n g ,
10

in s u r a n c e , f i n a n c in g e tc e te r a – fi n a n c i n g , i n t e r e s t e t c e t e r a .
g iv e n t h e f ig u r e s i n d i c a t e d h e r e i n th e A n n e x u r e E .

CNR had

W e w i ll s e e fr o m

p a g e – f r o m p a g e 7 9 2 th a t t h a t w a s a c tu a l ly a c u t - o u t – a n e x tr a c t fr o m
t h e ir R F P a n d t h e ta b le w a s p a s te d i n to t h is le t t e r. P l e a s e p r o v id e a n
e x p l a n a t io n o f t h e s e c o s t s .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : W e l l w e n o ti c e t h a t t h e s e c o s ts a r e
q u i te s ig n if ic a n t a n d q u it e h i g h a n d w e a r e t a l k i n g a b o u t h e r e 5 b il li o n
in r e s p e c t o f t h e – t h e ir r e q u e s t f o r a p r o p o s a l .
A D V M A H L A P E S E L L O : O k a y.
20

M R F R A N C I S Q U E N T I N C A L LA R D :

CNR

r e p l ie d

on

22 December

w h ic h i s A n n e x u r e 1 0 2 w h ic h i s p a g e 7 9 5 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

And

they

breakdown

t h e ir

m a n p o w e r c o s ts o f – I w i ll n o t g o t h r o u g h t h e – t h e f u l l – d e s c r i b e th e
a m o u n ts a t t h e m o m e n t b u t t h e y b r e a k d o w n th e ir m a n p o w e r c o s t s a s a

Page 230 of 247

20 MAY 2019 – DAY 96
b u d g e t e x p e n s e . Th e y d e s c r ib e th e ir f a c t o r y o v e r h e a d s a s b e e n a ty p e
t e s t w a r e h o u s e tr a i n in g i n C h i n a m o c k - u p b o g ie fa c to r y a n d e q u a l ly t h e
– o n p a g e 7 9 6 o v e r l e a f – t h e y g iv e t h e ir a d m i n is tr a t iv e o v e r h e a d s a n d
m a r k - u p – w h i c h w e w i ll s e e i n t h e b il li o n s a n d i m p o r t a n t ly t h i s i n c lu d e s
in s u r a n c e , tr a n s p o r t, i m p o r t d u ti e s , m a r k - u p a n d f o r m a r k - u p I w il l r e a d
p r o f i t – in m y i n te r p r e t a ti o n – w a r r a n ti e s , i n t e r e s t c o s ts e tc e te r a a l is t
o f w h a t t h e y i n c l u d e in t h a t p r i c e .

I p u t t h i s to g iv e c o n te x t to w h a t

f o ll o w s n e x t.
A D V M A H L A P E S E L L O : O k a y.
10

M R F R A N C I S Q U E N T I N C A L LA R D : O n 4 J a n u a r y a l l t h e d i e s e l b i d d e r s
w e r e i n v i te d t o s u b m i t B e s t A n d F in a l O ff e r s .

T h e le t t e r t o C N R i s

a tt a c h e d a s A n n e x u r e 9 5 a n d i f w e c o u ld g o t o t h a t o n e p l e a s e i t is
page 775.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :
a n d i t r e f e r s to th e i r t e n d e r.

I t is a le t t e r o f 4 J a n u a r y t o C N R

I would take you through to the second

la s t p a r a g r a p h – th ir d l a s t – t h ir d l a s t p a r a g r a p h .
“In

order

to

achieve

the

a b o v e o b je c t iv e

and

c o n c l u d e th e f in a l s ta g e s o f t h e e v a lu a ti o n p r o c e s s
20

Tr a n s n e t is r e q u e s t i n g th a t y o u p r o v i d e a B e s t A n d
Fi n a l O ff e r. Th e B e s t A n d F in a l O ff e r m u s t f o c u s o n
c o m m e r c ia l a s p e c t s o f y o u r b id o n l y.
the

fo ll o w i n g

We suggest

g u id e li n e s b e u s e d .

B e s t p r ic e

e x c lu d in g h e d g i n g a n d e s c a la t io n s .

Best price

u s i n g s u b c o n t r a c t o r s o f y o u r c h o ic e - n o t Tr a n s n e t

Page 231 of 247

20 MAY 2019 – DAY 96
E n g i n e e r i n g .”
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

“ D is c lo s u r e o f f o r e ig n

a m o u n ts a n d w h a t e x c h a n g e r a t e s u s e d . Yo u r lo c a l
c o n te n t ta r g e t a s

o r i g i n a l ly c o m m i t t e d w i ll n o t

c h a n g e a n d r e c o n c il ia t io n o f c u r r e n t b e s t a n d f i n a l
o ffe r p r ic e t o t h e s u b m i t t e d p r ic e w i t h r e a s o n f o r
c h a n g e s i f a n y.”
A D V M A H L A P E S E L L O : Ye s .
10

M R F R A N C I S Q U E N T I N C A L LA R D : Yo u s e e a n d I r e a d t h a t – y o u c a n
g iv e a d is c o u n t b u t ju s t t e l l u s t h a t t h i s is y o u r d is c o u n t .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

By

v ir t u e

of

th is

le t t e r

or

r e s p o n d i n g t o t h i s le t t e r C N R r e s p o n d e d o n 6 J a n u a r y – s o r r y – o n
4 J a n u a r y r e q u e s t in g a 1 4 d a y – fir s t r e q u e s ti n g a 1 4 d a y e x te n s i o n a n d
a g a in o n 6 J a n u a r y 2 0 1 4 r e q u e s t i n g a 2 1 d a y e x te n s io n . T h i s m a y b e
s e e n in A n n e x u r e 9 6 .
ADV MAHLAPE SELL O: 778.
M R F R A N C I S Q U E N T I N C A L LA R D : 7 7 8 a n d t h e r e a r e t w o e m a il s . T h e
20

fir s t o n e is 4 J a n u a r y w h ic h i s t o b e f o u n d a t t h e b o t to m o f 7 7 8 .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

W h i c h r e q u e s t s a n e x t e n s i o n o f1 4

d a y s f o l lo w e d b y t h e e m a il o f 6 J a n u a r y w h ic h is a t t h e to p o f 7 7 8
r e q u e s t in g a n e x te n s io n o f 2 1 d a y s a n d t h e r e a s o n fo r t h i s r e q u e s t i s
a ft e r

the

series

of

d is c u s s i o n s

betwe en

Page 232 of 247

members

of

the

CNR

20 MAY 2019 – DAY 96
C o n s o r t iu m a n In c o r p o r a te d J o i n t Ve n t u r e – I w i ll s k i p to t h e p o i n t .
“ As y o u a r e a w a r e d u r i n g t h e t e n d e r p r o c e s s C N R
u s e d p r i c e s fr o m Tr a n s n e t E n g i n e e r in g a s i ts l o c a l
s u b c o n tr a c t o r s f o r b u il d in g l o c o m o t iv e b o d i e s a s
w e ll a s th e a s s e m b l y o f th e l o c o m o ti v e s .

As the

p e r i o d f o r th e s u b m is s i o n o f t h e t e n d e r p r ic e is b y
Tr a n s n e t E n g i n e e r i n g w a s i n t h e e x c e s s o f t h r e e
m o n th s i t w il l b e i m p o s s i b l e fo r C N R t o o b t a i n a
q u o t a t i o n f r o m a n a lt e r n a tiv e lo c a l s u b c o n tr a c t o r b y
10 January 2014.”

10

H e n c e t h e r e q u e s t f o r e x t e n s io n .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

H o l d t h a t p o in t p le a s e a s w e lo o k

at 186.
ADV MAHLAPE SELL O: 186, where are you?
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y – my p o i n t – A n n e x u r e 9 7 .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

W h e r e G E r e p li e d o n 4 J a n u a r y.

S o r r y G E r e p l ie d …
20

CHAIRPERSON : I am sorry we – I am sorry we were at page 778 …
M R F R A N C I S Q U E N T I N C A L LA R D : A n d w e a r e n o w g o i n g t o p a g e 7 8 2 .
C H A I R P E R S O N : O k a y.
ADV MAHLAPE SELLO:

A n d y o u g o t o 7 8 2 w it h r e fe r e n c e t o y o u r

p a r a g r a p h 1 8 6 in y o u r s t a t e m e n t a p a g e 4 8 ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : O k a y. P l e a s e d o t h a t .
M R F R A N C I S Q U E N T I N C A L LA R D : T h i s i s w h e r e – fr o m m y s t a t e m e n t
1 8 6 – G e n e r a l E l e c tr i c r e p li e d o n 1 0 J a n u a r y.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : A n d t h e y g iv e th e r e :
“ F o l l o w in g t h e g u i d e li n e s … ”
Fi r s t p a r a g r a p h . I t i s a d d r e s s e d t o Mr S i n g h .
“ F o l l o w in g

the

g u i d e li n e s s u g g e s t e d G S E T h a s

p r e p a r e d th e r e s p o n s e s t h a t f o l l o w.
10

Best price

e x c lu d in g h e d g i n g a n d e s c a l a t i o n .”
A n d t h e y g i v e a p r ic e .
“ T h i s is … ”
B u t th e – w h a t f o l lo w s is p e r t in e n t .
“ T h i s i s th e b e s t p r ic e e x c l u d i n g h e d g in g e s c a l a t io n
a s p e r o u r p r o p o s a l o f 3 0 A p r i l 2 0 1 3 . T h i s b e s t p r ic e
a s s u m e s t h e u s e o f Tr a n s n e t E n g i n e e r in g a s a
s u b c o n tr a c t o r f o r t h e s c o p e is t o f i n d i n o u r
3 0 A p r il 2 0 1 3 s u b m i t ta l a n d i s b a s e d o n t h e p r i c i n g
T E p r o v id e d t o G S E T a t t h e s a m e t i m e .”

20

A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : T h e s e c o n d p a r a g r a p h :
“ Be s t p r i c e u s i n g s u b c o n tr a c to r s o f G S E T ’s c h o ic e
a n d n o t Tr a n s n e t E n g i n e e r in g .”
A n d t h e y g i v e a n a l t e r n a t iv e p r ic e th e r e .
A D V M A H L A P E S E L L O : A n d th e p r ic e th e r e r e d u c e s …

Page 234 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : By …
A D V M A H L A P E S E L L O : S a y o f a m ill i o n t o 2 4 m il li o n .
M R F R A N C I S Q U E N T I N C A L LA R D :

A b o u t b y - r e d u c e i t b y a b o u t 1 .2

m il li o n .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

I

b e li e v e

that

p r ic e

to

be

c o n s i s te n t w i t h t h e p r ic e q u o t e d i n t h e ir o r ig i n a l ta b l e o n t h e i m p a c t o f
n o t u s in g T E .
A D V M A H L A P E S E L L O : T E , o k a y.
10

M R F R A N C I S Q U E N T I N C A L LA R D :

Ye s .

I h a v e n o t c h e c k e d th a t

e x a c tl y b u t i t is c e r t a in ly a p p e a r s to b e o f t h e s a m e o r d e r.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : O v e r le a f i f I m a y o n 7 8 3 t h e y s e t
o u t a ll t h e c o n d i ti o n s – n o t t h e c o n d i ti o n s – b u t h o w th e y c o m p l i e d w i th
t h e o r i g in a l le t t e r.
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D : Th is i s p r e s e n t e d a s a B A F O p r i c e
s tr ic tl y i n a c c o r d a n c e w i th t h e r e q u e s t.
A D V M A H L A P E S E L L O : O k a y. N o w y o u r e fe r r e d t o G E – t h e p u r p o s e
20

being?
M R F R A N C I S Q U E N T I N C A L LA R D :

To e s t a b li s h a c o n c e p t o f w h a t a

BAFO is.
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D :

I n o w t a k e u s to 1 8 7 – m y

paragraph 187.

Page 235 of 247

20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

C N R r e p l ie d t o 4 J a n u a r y r e q u e s t

o n 1 0 J a n u a r y. Th is is A n n e x u r e 9 8 .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : R e c a l l t h a t t h e y h a v e a p p li e d t w i c e
f o r a n e x te n s i o n .
A D V M A H L A P E S E L L O : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

I have not found whether the

extension was granted or not granted.
10

A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : B u t I ju s t t a k e u s t o th e i r l e tt e r o f
1 0 J a n u a r y a n d w e r e a d fr o m t h e ir l e t te r.
A D V M A H L A P E S E L L O : S o h e n i f I u n d e r s t a n d t h e le t t e r a d d r e s s e d to
t h e b id d e r s o n 4 J a n u a r y th e y fir s t a s k f o r a 1 4 d a y e x te n s i o n t h e n a 2 1
d a y e x t e n s io n .

W h ic h w o u l d m e a n t h a t th e ir r e s p o n s e w o u l d c o m e

s o m e w h e r e t o w a r d s t h e e n d o f J a n u a r y o r F e b r u a r y fo r th e r e a s o n s t h a t
t h e y s ta t e d ?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
ADV MAHLAPE SELLO:
20

S o w h e n y o u s e n d u s to A n n e x u r e 9 8 t h a t

le t t e r is d a t e d 1 0 J a n u a r y ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : T h e y s e e m t o h a v e b e e n a b le t o c o m p l y w i th
p r o v i d in g t h e n e c e s s a r y i n f o r m a ti o n – n o t w i t h s t a n d i n g t h e ir r e q u e s t f o r
extensions?
M R F R A N C I S Q U E N T I N C A L LA R D : T h e y r e s p o n d n o t w i t h s ta n d i n g t h e ir

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20 MAY 2019 – DAY 96
r e q u e s t f o r a n e x te n s i o n .
A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : It is t h e n a t u r e o f t h e ir r e s p o n s e .
ADV MAHLAPE SELLO:

T h e n I r e a d th e i r d o c u m e n ts c o r r e c tl y, t h a n k

you.
M R F R A N C I S Q U E N T I N C A L LA R D :

In t h e n a tu r e o f t h e ir r e s p o n s e

t h e y s ta t e :
“ C o n s i d e r i n g th e g u i d e l in e s s u g g e s t e d i n t h e a b o v e
m e n ti o n e d l e t te r … ”
10

T h a t is th e l e t te r o f 1 0 J a n u a r y 2 0 1 4 .
“ … w e w o u l d l ik e t o p r e s e n t t o y o u o u r B e s t A n d
Fi n a l O ff e r f o r ( i n te r v e n e s ) . ”
CHAIRPERSON :

I a m s o r r y.

I am a 788.

Is t h a t w h e r e y o u a r e

reading?
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.
ADV MAHLAPE SELLO: Seven – 785.
M R F R A N C I S Q U E N T I N C A L LA R D : 7 8 5 C h a ir, s o r r y.
C H A I R P E R S O N : O h , o k a y. W e r e w e a t 7 8 8 a n d I h a v e – I d i d n o t g o
back.
20

Yo u l e ft m e b e h i n d o r w h a t ?

I thought you said 788 there.

w e n t th e r e . O k a y. 7 8 5 .
M R F R A N C I S Q U E N T I N C A L LA R D : 7 8 5 .
C H A I R P E R S O N : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : O k a y. I w o u l d r e a d a g a i n .
A D V M A H L A P E S E L L O : Ye s .
C H A I R P E R S O N : Ye s .

Page 237 of 247

I

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D :
le t t e r e tc e te r a

on

“With reference to your

4 J a n u a r y.

Considering the

g u i d e li n e s s u g g e s te d i n t h e a b o v e m e n ti o n e d l e t te r
o n 4 J a n u a r y w e w o u ld l ik e t o p r e s e n t t o y o u o u r
b e s t a n d f i n a l o ff e r f o r t h e t e n d e r.

We have

r e d u c e d o u r b e s t p r ic e in t h e T C O M o d e l – To ta l
C o s t t o O w n e r s h i p – th a t y o u r e fe r t o in y o u r le t t e r
o f 4 J a n u a r y fr o m 3 9 m il li o n – 3 9 . 7 m i ll io n r o u n d e d
– to 2 7 .3 6 m il li o n r o u n d e d . T h is p r i c e r e la t e s to t h e
10

c o s t o f m a n u f a c t u r e a n d d o e s n o t i n c l u d e tr a i n i n g
c o s ts , l o g i s t ic s , r o y a l t ie s , te c h n ic a l s u p p o r t , s e r v i c e
c h a r g e s , f in a n c e c o s ts a n d c o n t i n g e n c i e s e tc e t e r a .”
T h e p o i n t I w i s h t o m a k e Mr C h a ir is t h a t t h e s e q u a l i fic a ti o n s d o n o t
m a k e it a B A F O p r i c e . I t i s q u a l i fi e d i n r e s p e c t o f b e i n g a B A F O p r i c e –
v e r y q u a li f ie d i n r e s p e c t o f a B A F O p r ic e .
C H A I R P E R S O N : I n p a r t ic u l a r w h a t a r e t h e q u a li f ic a t i o n s t h a t y o u s a y
r e n d e r i t n o t t o b e a B A F O p r ic e ?
M R F R A N C I S Q U E N T I N C A L LA R D : I t a k e fr o m t h e ir p a r a g r a p h 1 …
CHAIRPERSON : Ja.

20

M R F R A N C I S Q U E N T I N C A L LA R D :

W e h a v e r e d u c e d o u r b e s t p r ic e

a n d th e l a s t s e n te n c e …
C H A I R P E R S O N : Ye s .
M R F R A N C I S Q U E N T I N C A L LA R D :

T h is p r i c e r e l a te s to t h e c o s t o f

m a n u f a c t u r in g …
CHAIRPERSON : Huh-uh.

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20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : A n d d o e s n o t i n c l u d e t r a in i n g c o s ts
…
CHAIRPERSON : Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D : L o g i s t ic s , r o y a l ti e s …
CHAIRPERSON : Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D :

Te c h n ic a l

support,

service

c h a r g e s , f in a n c e c h a r g e s …
CHAIRPERSON : Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D : A n d c o n t in g e n c i e s e tc e te r a .
10

CHAIRPERSON : Huh-uh.
M R F R A N C I S Q U E N T I N C A L LA R D : I …
C H A I R P E R S O N : I w o n d e r w h a t y o u e x c l u d e w h e n y o u s a y e tc e t e r a .
M R F R A N C I S Q U E N T I N C A L LA R D :

It

is

–

th a t

is

my

concern

M r C h a ir m a n . It is o p e n e n d e d . W h a t i s m e a n t b y e tc e t e r a ?
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D :

I n c o n tr a c tu a l t e r m s e tc e t e r a c a n

m e a n a h o s t o f th in g s .
CHAIRPERSON :

Ja.

O k a y, y e s .

S o t h a t – t h a t is t h e o n e

q u a li fi c a t io n . I s t h a t t h e o n l y q u a l if ic a ti o n ?
20

M R F R A N C I S Q U E N T I N C A L LA R D :

No,

it

is

in

fact

a ll

th o s e

q u a li fi c a t io n s b e f o r e th a t . Tr a in in g , l o g is t i c s , r o y a lt i e s …
CHAIRPERSON :

Ye s .

N o , w h a t I m e a n is t h e q u a l i fic a ti o n i n

paragraph 1 that you have just read.
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
CHAIRPERSON : Ja.

Page 239 of 247

20 MAY 2019 – DAY 96
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t i s t h e q u a li f ic a t i o n .
C H A I R P E R S O N : O k a y.
ADV MAHLAPE SELLO:

B e f o r e y o u g o f u r th e r t h e n i n t h a t r e s p o n s e .

What we have at 785 …
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : T h a t is i n r e s p o n s e to t h e l e t te r o f 4 J a n u a r y
r e q u e s t in g a B e s t A n d Fi n a l O ff e r a s a p p e a r a t 7 7 5 ?
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
ADV MAHLAPE SELLO:
10

N o w w h e n I g o t o 7 7 5 I – I n o te th a t it

r e q u ir e s t h e b i d d e r s to p r o v i d e a B e s t A n d F in a l O ff e r f o c u s in g o n ly o n
c o m m e r c ia l a s p e c t s o f th e b i d .
M R F R A N C I S Q U E N T I N C A L LA R D : C o r r e c t .
A D V M A H L A P E S E L L O : A s a g u i d e l in e i t is i n d ic a t e d w h a t - w h a t t h e y
must do?
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .
A D V M A H L A P E S E L L O : N o w i n r e a d in g t h o s e s u b – t h o s e b u ll e ts - n o
– th o s e n u m b e r e d p a r a g r a p h s a t p a g e 7 7 5 fr o m o n e t o fiv e – y o u s e e
t h e m a t o n e to f iv e ?
M R F R A N C I S Q U E N T I N C A L LA R D :

20

I w o u l d s u b m i t th a t th e y d o n o t

c o m p ly w i th t h e r e q u e s t to g i v e u s a B A F O p r i c e

f o c u s in g o n

c o m m e r c ia l c o n d it i o n s o n ly.
A D V M A H L A P E S E L L O : S o w h e n – w h e n C N R i n d ic a te s t h a t m y p r ic e
h a s r e d u c e d fr o m 3 9 m il li o n t o 2 7 m ill i o n b e c a u s e it e x c l u d e s th o s e
it e m s t h a t y o u lis t e d .
M R F R A N C I S Q U E N T I N C A L LA R D : Ye s .

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20 MAY 2019 – DAY 96
A D V M A H L A P E S E L L O : W h e r e w o u ld I fi t th a t i n t o o n e t o fi v e a t p a g e
775? What are they responding to there?
M R F R A N C I S Q U E N T I N C A L LA R D : I c a n n o t a n s w e r.
A D V M A H L A P E S E L L O : O k a y, t h a n k y o u .
M R F R A N C I S Q U E N T I N C A L LA R D :

I t i s a r e d u c ti o n b u t I c a n n o t

answer how they fit in.
A D V M A H L A P E S E L L O : S o i t is a n i m p r o m p t u r e d u c t io n b u t i t is n o t –
it d o e s n o t a r is e fr o m t h e r e q u e s t a t 7 7 5 ?
M R F R A N C I S Q U E N T I N C A L LA R D : It c e r t a i n d o e s n o t a p p e a r t o .
10

A D V M A H L A P E S E L L O : O k a y.
M R F R A N C I S Q U E N T I N C A L LA R D : R i g h t .
CHAIRPERSON :

W e ll y o u – y o u h a v e d r a w n o u r a t t e n t io n t o th e l a s t

p a r t o f p a r a g r a p h 1 o f t h e l e t te r a t p a g e 7 8 5 a n d h a v e s a i d t h a t r e n d e r s
t h e p r ic e n o t t o b e a B A F O p r i c e – a b e s t a n d fi n a l p r i c e , r i g h t ? Is th a t
r ig h t ?
M R F R A N C I S Q U E N T I N C A L LA R D : S o r r y.
CHAIRPERSON :

I a m j u s t c o n f i r m i n g t h a t I u n d e r s t o o d y o u c o r r e c t ly

n a m e ly t h a t t h e – y o u h a v e s a i d th a t th e l a s t p a r t o f p a r a g r a p h 1 a t
p a g e 7 8 5 r e n d e r s t h e p r ic e t h a t C N R g i v e s n o t t o b e t h e b e s t a n d f in a l
20

price.
M R F R A N C I S Q U E N T I N C A L LA R D :

Th e e x c l u s i o n s r e n d e r i t n o t a t

Best And …
C H A I R P E R S O N : Fi n a l .
M R F R A N C I S Q U E N T I N C A L LA R D :

Fi n a l O ff e r a s c o u ld b e u s e d i n

in t e r p r e t a ti o n t o b e t a k e n f o r w a r d .

Page 241 of 247

20 MAY 2019 – DAY 96
C H A I R P E R S O N : J a . N o , n o I a c c e p t th a t .
M R F R A N C I S Q U E N T I N C A L LA R D : J a .
C H A I R P E R S O N : I j u s t w a n te d to c o n fir m t h a t .
M R F R A N C I S Q U E N T I N C A L LA R D : C o n fir m t h a t is th e ( in d i s ti n c t) .
ADV MAHLAPE SELLO:
C H A I R P E R S O N : B u t y o u d i d n o t m e n ti o n t o is th e r e a s p e c i a l r e a s o n
f o r t h a t?
M R F R A N C I S Q U E N T I N C A L LA R D : W e l l …
CHAIRPERSON :
10

W h y t w o is – d o e s n o t a ls o d i s q u a l i fy it f r o m b e in g

above one.
M R F R A N C I S Q U E N T I N C A L LA R D : B e c a u s e i f w e r e f e r i t to p a g e 7 7 5
…
A D V M A H L A P E S E L L O : O k a y.
CHAIRPERSON : Ja.
M R F R A N C I S Q U E N T I N C A L LA R D :

T h e l e tt e r o f r e q u e s t i t s a i d b e s t

p r i c e e x c lu d i n g h e d g in g a n d e s c a la t io n s . S o t w o w o u l d e x c l u d e – t w o
…
CHAIRPERSON : Oh.
M R F R A N C I S Q U E N T I N C A L LA R D :
20

Ac c o r d s w i th th e i r o n e a n d t h r e e

a ls o a c c o r d s w i th t h e a d d it i o n a l – w i th th e f ir s t l e t te r e x c l u d i n g h e d g i n g
a n d e s c a l a t io n s , s o tw o w o u ld e x c l u d e t w o a c c o r d s w i th t h e ir o n e a n d
t h r e e a l s o a c c o r d s w i th t h e a d d i t io n a l , w it h t h e f ir s t le t t e r e x c lu d in g
hedging and escalation.
CHAIRPERSON :

B u t o k a y n o I u n d e r s t a n d th a t b u t is n ’ t t h e w h o le

c o n c e p t o f a b e s t a n d f in a l o ffe r n e c e s s a r ily, i t d o e s n ’ t n e c e s s a r i ly

Page 242 of 247

20 MAY 2019 – DAY 96
m e a n t h a t t h a t ’s y o u r fi n a l in c l u s i v e o f e v e r y t h in g ?
MR FRANCIS QUENTIN CALLARD:

I t c o u l d d e p e n d h o w th e o p e r a ti v e

r e q u e s t i t Mr C h a ir b e c a u s e t h e b i d s a r e c l o s e d a t a p a r t ic u l a r d a t e ,
t h e y c lo s e d a s I r e c a ll i t w a s A p r il 2 0 1 3 , w h e n w e w e r e n o w
a d j u d ic a ti n g m u c h l a t e r f o r w a r d e s c a l a ti o n o r e s c a l a t io n u p t o c o n tr a c t
d a t e a n d fo r e x e x c h a n g e m o v e m e n ts u p t o c o n tr a c t d a te a r e s o m e ti m e s
– a r e d e r i v e d v a r ia b l e s fr o m t h e b a s e p r i c e , s o th a t i s w h y i t’s a s k e d
g iv e i t t o u s o n y o u r b a s e p r ic e , w e w o u l d w o r k o u t th e s e , th e
e s c a l a t io n a n d fo r e x d i ffe r e n tl y, a n d g iv e n t h e d i ffe r e n t b i d d e r s m a y
10

h a v e d i ff e r e n t a s s u m p t i o n s a r o u n d f o r e x a n d e s c a l a ti o n , i t is – a n d
t h a t ’s , t h e n o r m a lis a ti o n p r o c e s s i t is e a s ie s t to a s k w o r k i t o n y o u r
b a s e p r ic e o n l y. W h a t w a s o u r o v e r t h e c o u n t e r p r i c e a t t h a t t i m e .
CHAIRPERSON : Mmm.
ADV MAHLAPE SELLO:

O k a y t h e n s t a y in g a t p a g e 7 8 5 u n d e r o n e

. . .( i n te r v e n t io n )
CHAIRPERSON :

J u s t b e f o r e th a t , b e f o r e t h a t , t h e n a t 7 7 5 w h e r e i t

s a y s th e b e s t a n d f i n a l o ff e r m u s t fo c u s o n c o m m e r c ia l a s p e c ts o f y o u r
b i d o n ly. Is th a t a n o r m a l r e q u ir e m e n t w h e n y o u t a lk a b o u t a b e s t a n d
fi n a l o ffe r ?
20

MR FRANCIS QUENTIN CALLARD :

Ye s I w o u l d s u b m i t t h a t i t w o u l d

b e , a s k i n g th e b e s t f in a l o ff e r is w e ’r e n o t a s k in g y o u t o c h a n g e a n y
t e c h n ic a l s p e c i f ic a t i o n s , i f I m a y u s e a s i m p le e x a m p l e I w is h t o b u y a
m o t o r c a r, a n d t h e d e a l e r s a y s it ’s g o i n g t o c o s t m e R 1 5 0 0 0 0 0 fo r t h i s
c a r, w i t h a l l t h e s e o p ti o n s a n d I s a y is t h a t y o u r b e s t a n d f i n a l o ff e r a n d
h e m i g h t s a y y e s o r h e ’l l s a y w e w i ll g iv e y o u a fu r t h e r R 1 0 0 0 0 o n i t

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20 MAY 2019 – DAY 96
b u t th a t d o e s n o t c h a n g e t h e m a k e u p o f t h e c a r, t h e o p ti o n s , s o t h e r e ’s
n o te c h n ic a l c h a n g e fo r it , i t ’s n o t c h a n g i n g t h e r e p a y m e n t p e r i o d , i t ’s a
s i m p l e s tr a i g h t f o r w a r d I c a n o ff e r y o u R 1 0 0 0 0 o ff t h e fi n a l p r ic e a n d
t h a t is w h a t w o u l d n o r m a lly b e u n d e r s t o o d b y a r e q u e s t f o r a b e s t a n d
fi n a l o ffe r.
CHAIRPERSON : Okay thank you.
ADV MAHLAPE SELLO:

T h a n k y o u C h a ir, n o w o n p a r a g r a p h o n e d i d

t h e b i d o r t h e R F P r e q u ir e th e b i d d e r s to i n d ic a te t h e tr a i n i n g c o s ts , o r
t o c o s t t h e tr a i n in g r e q u ir e m e n ts t o p r o v i d e f o r l o g is t ic s , fo r r o y a l ti e s ,
10

t e c h n ic a l s u p p o r t a n d t h e lik e ?

I s t h e c o s ti n g f o r a l l t h o s e e l e m e n t s

e x p e c te d to b e f o u n d i n th e o r i g in a l b i d ?
MR FRANCIS QUENTIN CALLARD:

I n d e e d y o u w il l fi n d t h a t s i m i la r

p o i n t s a r e , b e c a u s e i f I c o u ld t h e n t a k e y o u to t h e s u p p l e m e n t a r y p a g e ,
p a g e 2 3 o f m y s u p p le m e n t a r y A n n e x u r e E w h i c h w e ’ v e b e e n d e a li n g
w i t h t h e r e c o n c i li a ti o n o f p r ic e , j u s t to h i g h li g h t .
ADV MAHLAPE SELLO:

Ye s .

M R F R A N C I S Q U E N T I N C A L LA R D :

A n d I ’ m r e a d in g n o w fr o m t h e

supplementary 23.
ADV MAHLAPE SELLO:
20

Ye s .

M R F R A N C I S Q U E N T I N C A L LA R D :

T h a t t a b l e g i v e s a n in d ic a t i o n o f

h o w a l o c o m o ti v e p r i c e is m a d e u p , t h e b a s e p r ic e s u b m i t t e d b y t h e
b i d d e r, a n d t h e n

t h e r e ’s

a c q u is i ti o n

you

cost,

a d d i t io n a l i t e m s t o g e t t o t h e c a p it a l

w il l

see

there

we

have

special

to o l i n g ,

e n g in e e r i n g s u p p o r t , c a p i ta l s p a r e s , c o n s u m a b l e s , s p e c i a l h o l d in g a n d
a l is t o f i t e m s i n c l u d in g s e t u p c o s ts , i n s u r a n c e r o u n d i n g a n d a l l t h o s e

Page 244 of 247

20 MAY 2019 – DAY 96
if I t h e n m a y r e a d t o th e li n e p r ic e p e r lo c o m o t iv e s u b m it t e d a s p e r
A n n e x u r e F t h e c a p it a l a c q u is it i o n c o s t o f a lo c o m o t iv e .

To d e liv e r a

lo c o m o t iv e r e q u ir e s a l l o f t h o s e e l e m e n ts .
ADV MAHLAPE SELLO:

O k a y s o i n o r d e r t o g e t , to p r e s e n t t h i s

r e d u c e d p r i c e C N R th e n d e d u c te d t h o s e v e r y p a r ts o f t h e c o s t o f t h e
lo c o m o t iv e i ts e l f t h a t th e y h a d o r ig in a lly c o s t e d i n t h e ir b i d ?
M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:

O k a y.

Correct.
W h ic h i f t h e y w e r e t o m e e t

s p e c i f ic a ti o n a n d w e r e to s u c c e e d t h e y w o u l d h a v e to i n c o r p o r a t e in t h e
10

e x e c u ti o n o f t h e c o n tr a c t ?
MR FRANCIS QUENTIN CALLARD :

T h a t is m y u n d e r s t a n d i n g a n d

in t e r p r e t a ti o n o f t h is y e s a n d I w i ll a s w e l o o k a t t h e w h a t C N R i n c lu d e d
in t h e ir m a r k - u p o f A n n e x u r e , i n th e i r m a r k - u p o f F i f I m a y ju s t r e f e r
b a c k t o t h a t p r e v io u s ly b e c a u s e th a t w a s a n i t e m – s o r r y i f I tu r n b a c k
t h e p a g e , i f y o u ’ ll g i v e m e h a l f a m o m e n t, a n d I r e s p o n d e d o n t h e 4 t h o f
J a n u a r y, A n n e x u r e E , t h e b r e a k d o w n o f th e ir A n n e x u r e E .
ADV MAHLAPE SELLO:

G iv e u s a p a g e n u m b e r p l e a s e ?

M R F R A N C I S Q U E N T I N C A L LA R D :
ADV MAHLAPE SELLO:
20

Annexure E, Annexure 101.

O k a y, a t p a g e 7 9 1 ?

MR FRANCIS QUENTIN CALLARD:

Sorry may I g o to the breakdown

o n A n n e x u r e 1 0 2 in t h e ir r e s p o n s e , p a g e 7 9 6 .
ADV MAHLAPE SELLO:

O k a y.

MR FRANCIS QUENTIN CALLARD:

W h e r e u n d e r t h e ir h e a d i n g o f

a d m i n o v e r h e a d s a n d m a r k - u p o f t h e ir s ig n if ic a n t b il li o n s t h e r e t h e y s a y
t h is f ig u r e i s m a d e u p o f i n s u r a n c e tr a n s p o r t c o s t s , i m p o r t d u t ie s , m a r k -

Page 245 of 247

20 MAY 2019 – DAY 96
u p , w a r r a n t e e s , in t e r e s t c o s t , p e r fo r m a n c e b o n d s , c o n s u l t in g f e e s ,
c o n ti n g e n c y, a n d o n t h e . . .( i n t e r v e n t i o n )
ADV MAHLAPE SELLO:

785?

MR FRANCIS QUENTIN CALLARD:

A n d o n 7 8 5 a b o g e y f a c t o r y, ty p e

t e s t T E w a r e h o u s e , T E tr a i n i n g i n C h i n a , T E m a r k - u p , m a n p o w e r c o s ts ,
m a n y o f t h e f ig u r e s o n e w o u l d e x p e c t to fi n d i n t h i s s e t u p h e r e th e y
h a v e n o w t a k e n o u t s o a ll o r s o m e b u t t h e r e is s u c h a r e d u c ti o n th a t
t h e s e f ig u r e s w o u l d b e s i g n i fic a n tly i m p a c t e d h e r e i n w h a t w e c a ll t h e
a d d it i o n a l i te m s fo r t h e l o c o m o ti v e h a v e b e e n r e m o v e d .
10

ADV MAHLAPE SELLO:

Ye s C h a ir, i t ’s b e e n b r o u g h t t o m y a tt e n ti o n .

C H A I R P E R S O N : Ye s I t h i n k t h a t l a s t p o i n t p le a s e j u s t l e t r e fr e s h o u r
m i n d s o n it w h e n w e m e e t n e x t t i m e , t h a t l a s t t i m e t h a t y o u w e r e
making.
M R F R A N C I S Q U E N T I N C A L LA R D :

Sure.

C H A I R P E R S O N : I t’s o n e m in u te p a s t fiv e , w e w i ll a d jo u r n n o w a n d w e
a r e n o t s i t ti n g t o m o r r o w a n d o n W e d n e s d a y b e c a u s e t h e o w n e r o f t h e
b u il d in g n e e d s t h e v e n u e a n d i n te r m s o f t h e le a s e w e a g r e e d t o g iv e
t h e m t h a t o p p o r tu n i t y t o u s e i t f o r t h e ir p u r p o s e s b u t w e w i ll r e s u m e o n
T h u r s d a y a n d o n T h u r s d a y I s e e c o u n s e l w a n ts t o s a y s o m e th i n g a b o u t
20

Thursday?
ADV MAHLAPE SELLO:

Ye s p l e a s e C h a ir, w e h a d s c h e d u le d a n o t h e r

f u ll d a y w i t n e s s f o r T h u r s d a y, n o t m y w i tn e s s , t h e w i t n e s s i s r e a d y, Mr
C a ll a r d I h a v e n o t f i n is h e d , w e n e e d a b o u t tw o h o u r s t o fi n is h a n d I
f e a r i f w e s ta r t a t t e n o ’c lo c k w e t h e n w i ll i m p a c t t h e n e x t w i t n e s s i n
t h a t ti m i n g .

Page 246 of 247

20 MAY 2019 – DAY 96
C H A I R P E R S O N : Ye s , ja .
ADV MAHLAPE SELLO:

May I request that perhaps we consider

s t a r ti n g a t n i n e o ’ c l o c k o n Th u r s d a y a n d M r C a l l a r d a n d I w il l t r y a n d
fi n i s h b y t e a t i m e , t h e n t h a t w i t n e s s c a n t h e n r u n fo r m h a lf p a s t e l e v e n .
C H A I R P E R S O N : W o u l d t h a t b e fi n e w it h y o u M r C a ll a r d ?
M R F R A N C I S Q U E N T I N C A L LA R D : T h a t w i ll b e f in e C h a ir.
ADV MAHLAPE SELLO:

T h a n k y o u C h a ir.

C H A I R P E R S O N : T h e n w e w i ll s t a r t a t n i n e o n T h u r s d a y. W e a d j o u r n .
I N Q U I RY A D J O U R N S TO 2 3 M AY 2 0 1 9
10

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