Transnet and the China Export Credit Insurance Corporation (Sinosure) have agreed to a $2.5 billion funding guarantee to finance procurement of mechanical and electrical products and equipment from Chinese enterprises.

The money will also cover funding for operation, maintenance and other services from Chinese enterprises in South Africa. Both entities agreed the loan be used for railway, ports and pipeline projects in South Africa.

The guarantee enables Transnet to raise funds in the markets for the financing of its infrastructure investment programme, including acquisition and maintenance of its locomotive fleet. It also guarantees Transnet favourable repayment terms, including longer tenor and competitive interest rates.

Chinese companies have won significant open and competitive bids to supply rolling stock and equipment to Transnet. In April last year, Chinese manufacturers China South Rail Zhuzhou Electric Locomotive and China North Rail Rolling Stock were awarded contracts to build 359 electric and 232 diesel locomotives respectively, with Transnet.

In 2013, the company also bought seven new state-of-the-art ship-to-shore cranes for its port operations in Durban from Chinese original equipment manufacturer, ZPMC.

The relationship extended to funding. In June this year, Transnet secured a $2.5 billion bilateral loan from China Development Bank.