Transnet is to invite the private sector to tender for up to 20,000km of South Africa’s railway lines. “These routes will be operated by successful bidders on a concessional basis. Chris Wells, acting chief executive at Transnet, told Sake24 in an exclusive interview that the strategy has been developed in collaboration with the Department of Public Enterprises. ‘The process needs to be ratified by cabinet, after which the first tenders will be published. We expect this could happen by year-end or early next year.’

“Minister of public enterprises Barbara Hogan has already announced the branch line strategy to her portfolio committee.

Wells says that in the past Transnet has been obliged to shut down parts of its rail network. ‘It was uneconomic to do business on parts of the network where lower volumes and little activity were the order of the day.’

“Wells notes that while Transnet is currently transporting high volumes along specific routes, and not using large parts of its rail network, elsewhere there might be smaller entrepreneurs or organisations that, with a good business plan, could operate the undeveloped networks economically. ‘The concession concept has been tried by others with mixed success. Transnet will thoroughly examine any aspiring concessionaire’s business plan before granting a concession. Interest has been expressed from sectors like the forestry industry, and tourism could also derive benefit from the strategy.’

 “Wells points out that concessions will not be granted on every available route. ‘It is important for the concessions to be financially viable. There is no doubt that certain routes have more potential than others, but there are many entrepreneurs who might see opportunities that do not currently exist along other routes.’ 

“Concessionaires will own their own trains as well as the branch lines with which they are involved, and will have access to Transnet’s routes. According to Transnet, the models have not yet been finalised, but the idea is that concessionaires will at certain times be able to use their trains to transport their own freight along Transnet routes, or alternatively be able to hitch their wagons to Transnet’s trains, which will convey the freight further.

“Johan Pienaar, deputy chief executive at Agri SA, has high praise for Transnet’s plan. ‘We have not yet been made aware of this strategy and will need to see the details, but if comes to fruition there will be considerable interest from the agricultural community to obtain such concessions.’ He reckons there are parties in the agricultural industry with capital or access to it, enabling them to obtain and operate concessions.

 “York Timbers chief executive Piet van Zyl says the forestry industry has for some time been interested in rail networks with dedicated routes, and reckons there is great potential for the use of rail in the forestry industry. ‘Raw materials needing transport to mills and finished products for the market can all be conveyed by rail. We will just have to investigate the available networks. The rising costs of road transport could make trains a good option for those in the industry.’

 “Grain SA’s Nico Hawkins says while such concessions could be good news for the agricultural sector, much will depend on the quality of service concessionaires receive from Transnet once their freight leaves the branch lines to join Transnet’s routes. ‘Freight transport by rail is not currently first choice for the industry 
because of the poor service from Transnet and the inferior infrastructure which has steadily deteriorated. The grain industry does not wish to use rail transport.’ About 20% of South Africa’s grain produce is currently transported by rail. In the past this figure was up to 80%.

“Kruger International economist Ulrich Joubert says that in specific cases concessions could be profitably operated. ‘Eskom or its coal suppliers might also possibly be able to draw up a good business plan for a concession to transport coal to power stations. For such a concession to be financially viable, volumes and frequent use of the rail infrastructure would be necessary.’

 “Transnet hopes, with the support of the Department, to obtain cabinet approval within months.”

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Tags | Transnet