By Devon Maylie
JOHANNESBURG--French power and transport engineering company Alstom SA (ALO.FR) Wednesday secured a $5.8 billion contract to refurbish South Africa's passenger rail company with a fleet of new train cars.
On Wednesday, state-backed Passenger Rail Agency of South Africa said the French company led a consortium to win the sought after deal, one of the biggest government contracts awarded in post-apartheid South Africa.
The contract, worth 51 billion rand ($5.8 billion), is for ten years and includes replacing 3,600 train cars starting in 2015, a spokesman for PRASA said. The company currently has roughly 4,600 coaches that ferry people across the country, many of which are nearly four decades old.
South Africa, like many countries in Africa, is in the process of revamping and expanding its infrastructure capacity. President Jacob Zuma announced a plan earlier this year to spend $462 billion over 15 years on infrastructure development, including rail.
The deal for passenger cars follows similar purchases by the country's state-owned Transnet Ltd., which operates South Africa's ports and freight railroads, to buy 143 locomotives from General Electric Co. (GE).
South Africa's rail system, despite its ageing railstock, is one of the best on the continent and is used to transport people and move minerals such as coal to the ports.
"The current fleet has reached the end of its life and we need to replace it," said Prasa Chief Executive Lucky Montana. "Government realized for our cities to work in the future we need more reliable trains."
Mr. Montana said the deal will create 33,000 new jobs over 10 years and is the first part in further plans to improve the passenger rail network.
Alstom beat out other companies including Canada's Bombardier Inc. (BBD.B.T), Spanish company Construcciones y Auxiliar de Ferrocarriles SA (CAF.MC) and China CNR Corporation Ltd. to clinch the deal.
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