Alstom JV in $5.1-bn deal to build coaches for South African rail

French multinational conglomerate Alstom's South African joint venture Gibela has agreed to build trains for Passenger Rail Agency of South Africa (PRASA) in a deal valued around 51 billion SA rand ($5.1 billion).

The order, one of the biggest rail transport contracts worldwide, is the largest in the history of Alstom, Alstom said in a statement.

The historic deal was signed by PRASA CEO Lucky Montana and Alstom chairman and CEO Patrick Kron, in the presence of South African president Jacob Zuma and visiting French president Francois Hollande.

It involves supply of 600 passenger trains consisting of 3,600 coaches to be delivered over a period of ten years beginning 2015, and construction of a local manufacturing facility.

Gibela, 61-per cent owned by Alstom, will also provide technical support and supply of spare parts over a period of 18 years.

The deal is part of South Africa's ambitious programme to revitalise the country's growing rail industry, create jobs and provide efficient, reliable and safe public transport, the statement said.

The programme will replace the ageing suburban trains in service in South Africa's biggest urban areas: Johannesburg, Cape Town, Durban and Pretoria with 1,200 electric trains over a period of 20 years. The Alstom deal is the first phase of the plan.

Speaking on the occasion of the signature, Lucky Montana said, ''The PRASA fleet renewal programme is the catalyst for the transformation of Metrorail services and public transport in South Africa as a whole.''

''Alstom is proud to have been selected by PRASA for a project of this magnitude. We are fully committed to mobilising the best of our technology and expertise through our South African joint venture Gibela and we believe our trains will set a high standard in serving the interests of commuters,'' Henri Poupart-Lafarge, president of Alstom Transport said.

The order will provide a big boost to Alstom whose orders in the April-June quarter were down 32 per cent at €4.1 billion ($5.5 billion) compared to a year ago quarter due to lack of big contracts. Sales were down 2 per cent at €4.6 billion during the period.

The financial closure of the deal is expected by the end of the year.

Alstom will supply its advanced X'Trapolis Mega train to PRASA which can travel up to 120 kmph which can be upgraded to 160 kmph and carry over 1300 passengers in six coaches. The trains will be equipped with air conditioning, ergonomic seats, real-time on-board information, Wi-Fi internet access and a combination of direct and indirect lighting to increase the feeling of space.

Gibela will build a manufacturing site in Ekurhuleni, east of Johannesburg, to build the trains in South Africa. The manufacturing facility will also house an engineering centre and a training facility. Construction is scheduled to start in early 2014 and the factory is due to come on-stream in 2015.

The project is expected to create over 1,500 direct jobs in the local factory and 33,000 indirect jobs over the first 10 years.

Alstom intends to manufacture the first 20 trains in its Brazilian plant in Lapa.

South African state-owned enterprise PRASA was formed in 2008, consolidating the country's various rail entities Metrorail, Autopax, Shosholoza Meyl and Intersite.

Paris-based Alstom is a global leader in power generation and transmission and rail infrastructure. Its rail division offers widest range of high-tech rail solutions from rolling stock to signaling, infrastructure, services and complete turnkey systems. The company has around 93,000 employees and reported turnover of €20.3 billion in fiscal 2013.