The KfW loan will mature in 15 years, with a five-year grace period in which Transnet will only pay interest. The loan was negotiated in Rand to provide no currency risk while the cost of the loan is in line with Transnet's average cost of debt.

The remaining Rand 6.99bn cost of the locomotives will be paid through loans with Export Development Canada (Rand 5.24bn) and Investec Bank (Rand 1.75bn) which were agreed in March.

Bombardier is supplying 20 Traxx Africa 100km/h dual-voltage (3kV dc and 25kV ac) electric locomotives to Transnet subsidiary Transnet Freight Rail. Delivery is set to start in April 2016 and conclude by the end of 2017, with 60% of the value of the contract set to be localised and manufacturing taking place in Durban.

The KfW loan follows a similar a Rand 30bn agreement signed earlier this month with China Development Bank (CDB) for the 232 diesel and 359 electric locomotives being supplied by CRRC under the same programme. It also secured a Rand 6bn funding agreement for the 233 diesel-electric GE locomotives, the first of which is set to roll out next month.