China Development Bank (CDB) will provide finance to South African transport company Transnet through a co-operation agreement signed last week.

CDB has reportedly agreed to lend up to US$5bn to Transnet to modernise its ageing railway system, but a spokesperson for the South African firm tells GTR that no amount has been agreed on yet.

The agreement includes, but is not limited to, the financing of the construction and upgrade of railway and port infrastructure and the localisation of equipment. Moreover, the two parties will collaborate on research and development initiatives, manufacturing, marketing and the construction of cross-border infrastructure throughout the African continent.

Transnet chief executive Brian Molefe says: “This historic agreement between two state-owned entities within BRICS illustrates the opportunities inherent in such diplomatic ties. The agreement will enable us to explore innovative funding options as we pursue our borrowing plan focusing on cost-effective solutions and diversity.”

The agreement was signed ahead of the BRICS meeting that took place in Durban, South Africa, at the end of March.

Last year, Transnet announced a R300bn investment programme to revamp and expand its ports, rail and pipelines infrastructure and equipment. According to the firm, two thirds of the required funding will be raised from internal resources while the remainder will be raised through various sources in the debt capital markets.

As part of the programme, Transnet has also awarded various equipment manufacturing contracts to equipment manufacturers, including General Electric, Finnish crane maker Kalmar and China South Railways.