PRASA TECHNICAL OUTPUTS ROLLING STOCK FLEET REQUIREMENT STATEMENT Dries van der Walt Executive Manager Strategic Asset

1. PRASA TECHNICAL OUTPUTSROLLING STOCK FLEET REQUIREMENT STATEMENTDries van der Walt Executive Manager Strategic Asset Development 5 April 2011

2. CONTENTS • Context to the Technical Outputs. • Status Quo – Passenger Rail technology in South Africa. • Approach in developing User Requirements and Technical Outputs. • Relevant considerations of the South African rail system. • Relationship between PRASA’s Technical and Economic/Social Objectives. • What PRASA has provided on the website. • What has not been provided and reasons. • Our expectations of the Market Engagement objectives. • Conclusions.

3. STATUS QUO: URBAN RAIL • Basic train concept dates from 1928. • Legacy monolithic system attributes have not yet been aligned with separate freight- and passenger requirements. – Dependencies due to dual freight and passenger system. • Minimal new rolling stock introduced since 1980’s.

4. STATUS QUO: LONG DISTANCE (INTER CITY) • Many 90-100km/h curves. (Low average speeds) • Vacuum-braked freight trains dominate signaling. • Many routes single-tracked. • Coach designs are dated.

5. STATUS QUO URBAN COMMUTER RAIL ROLLING STOCK AGE DISTRIBUTION Average age: Beyond 37 years – not effective life due to upgrade program.

6. NEED FOR FLEET RECAPITALISATION: CURRENT VS CONTEMPORARY TECHNOLOGY STANDARDS

7. RE-BRAND PASSENGER RAIL SERVICES:STATUS QUO POSITIONING Ultra-high Speed High Speed Low Speed Local Long Haul Regional ROUTE DISTANCE

8. Light Rail Metro RE-BRAND PASSENGER RAIL SERVICES:FUTURE POSITIONING Ultra-high Speed Ultra-high-speed High Speed Regional Rail Not a contemporary rail solution Low Speed Local Long Haul Regional ROUTE DISTANCE

9. APPROACH: USER REQUIREMENTS AND TECHNICAL OUTPUTS PRASA ‘s technical objectives are derived from: The mandate from the Shareholder, as reflected in the PRASA Mission and Corporate Plan and underpinned by the drive towards service excellence, which include: • Enhancing the customer experience and customer satisfaction. • Providing service performance that is safe, reliable and affordable. • Break cycle of deterioration of rolling stock. • Implementing best practice technology upgrades. • Meeting the emerging demand challenges.

10. APPROACH: USER REQUIREMENTS AND TECHNICAL OUTPUTS (CONT) The next generation of stock must reflect current and future trends in technology and management, while also facilitating our other objectives of: • Creating sustainable industrialisation and securing local content (IPAP). • Reducing overall subsidy requirements in medium term and ultimately reduce • cost and subsidies per passenger. • Contributing to the ethical obligation of providing dignified transport to society • and at the same time support job creation for that very society. • Translating into reality the objective of passenger rail being the backbone of • public transport in South African cities.

11. APPROACH: USER REQUIREMENTS AND TECHNICAL OUTPUTS (CONT) The User Requirements and Preliminary Technical Outputs therefore seeks to present PRASA’s requirements in the form of outputs and standards that are globally common and known. We do not wish the market to build a South African Special - but rather invite the world to introduce modern vehicles and good practice technology to our system, use our labour and industrial base to help manufacture those vehicles at a price that the South African people can afford.

12. RELEVANT CONSIDERATIONS OF THE SOUTH AFRICAN RAIL SYSTEM The following characteristics relating to service delivery and rolling stock are drawn to suppliers attention, which should not prevent the use of common platforms to serve the South African market: • Very high load factors (250+ people per car) – especially on Metrorail (Urban) services. • Much a function of the historic role of rail as cheap mass mover to ensure mobility of labour into cities. • Long standing culture of riding between cars and hanging from open doors. • High summer temperatures, low winter temperatures, high levels of humidity (varies per geographical area) • Very long journey times – required facilities (on Shosholoza Meyl)

13. RELEVANT CONSIDERATIONS OF THE SOUTH AFRICAN RAIL SYSTEM (CONT) The following are generically relevant to all systems but considered important/sensitive issues for PRASA: • Fire risk on trains, including those started by passengers due to performance frustrations. • Crashworthiness. • Theft of high value materials (aluminium, copper, brass) and components and other forms of vandalism and tampering. • Passenger security. • Passenger information. Price and affordability are always relevant issues for PRASA as ticket revenue is constrained by the need to keep tickets affordable.

14. RELATIONSHIP BETWEEN PRASA’S TECHNICAL AND ECONOMIC/SOCIAL OBJECTIVES Rolling stock renewal of this magnitude will be attractive to the Market. Respond positively and vigorously to our desire, within requirements of South African laws and regulations for: • A high level of local content. • Continued industrialisation. • The development of small and medium sized enterprises. • Broad-based black economic empowerment (BBEEE). These objectives are non-negotiable: By promoting options for globally recognised platforms and standards we seek to make it simple in combining the technical and wider economic/social objectives and requirements.

15. WHAT PRASA HAVE PROVIDED THE PRASA WEBSITE • User Requirements Documents • i) Metrorail Multiple Units and. ii) At a high level - for long distance coaches (intercity - SM). • Purpose: To set out PRASA’s needs in output format and allow the creation of a Technical Specification. • Preliminary Technical Outputs • i)Metrorail 3kV Multiple Units (EMUs.) • Purpose: To identify a set of standards and specifications that meet the User Requirements while providing the maximum opportunity for suppliers to use common platforms and spares. • The Preliminary Technical Specification for EMUs will be 90% consistent with any future specification for rolling stock for the Eastern Cape when traction options for this region have been concluded. • Infrastructure Interface Document • Purpose: To identify parameters and constraints of the existing infrastructure, where relevant, • when introducing new rolling stock.

16. WHAT HAS NOT BEEN PROVIDED YET AND REASONS Traction Choices for all Services Preliminary Technical Outputs specifies a consistent rolling stock platform, but in some regions PRASA has choices on traction type. Choices are rather complex: (in Eastern Cape commuter applications and for long distance passenger rail) due to South Africa using two voltages, and areas without electrical overhead supply. The following options are being evaluated: East London : 25Kv EMUs, but limited order size. Port Elizabeth: Diesel or hybrid traction multiple unit/locomotive + hauled coaches, or complete electrification and electrical multiple units. Shosholoza Meyl: Hybrid traction locomotive or single traction locomotives with locomotive changeover capabilities. Specific Decisions on Maintenance Strategy Range of maintenance options available - each bringing specific risks and costs. Through the Market Engagement process we wish to identify suppliers attitudes towards the above traction and maintenance options – final decision will rest on a value for money basis.

17. EXPECTATIONS OF THE MARKET ENGAGEMENT OBJECTIVES • PRASA’s engagement with Industry players (OEM’s) - to share with us: • Their experience in manufacturing and maintenance, and their specific interest in a future South African procurement model. • Examples of transfer and development of technology and skills. • How to achieve a 65% local content with the new rolling stock, including contributions by small and medium/BBEEE enterprises. • Their preferred level of involvement in maintenance support. • The necessary annual vehicle volumes and contract duration required to justify investment in a local production plant. • An initial view on South Africa being able to export rolling stock. • Examples of best practice in Government support mechanisms for inward investment in infrastructure to support modernisation and expansion of the rail system. • Any issues in the documentation and information that would discourage industry players from participating and/or setting up local rolling stock manufacturing plants and maintenance facilities.

18. CONCLUSIONS • PRASA with support of the South African Government wishes to engage in a rolling stock procurement programme that: • Brings a new and positive experience to PRASA’s customers. • Provides a service that is safe and reliable and affordable to both rail • passengers and government. • Asking that our suppliers respond positively: • in bringing current global rolling stock best practice to South Africa. • engage with the local supply market and government bodies to secure a • high level of local content and a future industrial base. • We believe that we will be able to position rail to its rightful place, break out of cycle of deterioration of rolling stock and meet the passenger demand in future. • And therefore, we would like to spend the coming days hearing from you about whether our approach is pragmatic enough to ensure the best procurement of new stock for our market.