Creecy plans on more private sector involvement in rail

Transport minister Barbara Creecy wants to extend private sector participation in SA’s rail network and plans to establish a dedicated unit in her department to pursue this goal. 

State-owned freight, ports and logistics company Transnet has already embarked on a programme to open its rail network to the private sector by selling rail slots to third parties or private sector players and has also contracted with a Philippine ports operator to run the Durban container terminal. 

In her budget vote speech in a mini-plenary of the National Assembly on Monday, Creecy revealed plans to create a private sector participation (PSP) unit. This unit would have the necessary skills and expertise in the design, negotiation and contracting of projects to seek private sector involvement. Its primary objective would be to identify suitable areas for private sector participation in rail and ports.

The framework for private sector participation was approved in December 2023. 

Before her address, Creecy told a media briefing that the unit would be calling for expressions of interest from the private sector. 

“There is a situation with our rail where you have a number of branch lines that would be serving specific business interests and one would want to look at what appetite there would be for the operation and improvement on those branch lines,” she said. 

Third-party involvement would not be confined to the branch lines that have already been opened to the private sector but it was too early to identify which ones would be offered. She said the private participation in energy generation gave an indication of what was possible from this type of operation in the transport sector.

Creecy emphasised that it was crucial to move freight from road to rail, but Transnet had certain constraints. The question was how to deal with these constraints appropriately and how it could be achieved more effectively by including other operators. Third-party operators would also be involved in infrastructure development. This would be the focus of the PSP unit. 

“I am deeply worried, for example, about the fact that the ore line from Sishen Kumba is facing a situation where the stockpiles are so full that they are considering having to do a second round of retrenchments. Jobs is the number one issue.” 

On devolution of passenger transport to provinces and metros — a long-standing demand of the Western Cape government and the Cape Town metro — Creecy noted that a key question was affordability. It was also not desirable to have separate state-owned passenger operators in all nine provinces. The department had developed a draft devolution strategy but she needed to study it and it was too early to say whether she would commit to devolution.

“You can’t plan a city without involving yourself in transport planning,” she said. 

Creecy said in her speech that her priority was to stabilise the transport system and make her department fit to fulfil its policy-making and regulatory role. 

“Our sector is not operating as either an effective economic facilitator or as a much-needed social service.

“In the aftermath of the Covid-19 pandemic, the freight system was characterised by long delays in the movement of key bulk minerals, containers and vehicles.

“Dysfunctional port terminals resulted in long waiting times for ships wishing to berth, as well as congestion at strategic border crossings and key national highway corridors. Our freight rail system was characterised by maintenance backlogs, cable theft and skills shortages.

“Our road systems deteriorated throughout the country and many provinces failed to execute maintenance and new build programmes, resulting in unspent funds being returned to National Treasury.” 

The government, in collaboration with business and unions, formed the National Logistics Crisis Committee (NLCC) as a co-ordinated integrated response to meet the scale of the crisis. 

The NLCC had three objectives: improving operational performance of industry supply chains, including freight rail and ports; implementing reforms to modernise the freight transport system for efficiency and competitiveness; and implementing necessary regulatory change or exemptions to enable efficient procurement and adequate funding for network maintenance. 

Creecy said the reduction in greenhouse gas emissions in all modes of transport would become a necessity once the new Climate Bill was signed into law.

“Our transport sector is responsible for about one tenth of our country’s CO₂ emissions, and we will have to do our bit to achieve the national development plan target of net-zero by 2050.

“Implementation of the green transport strategy will be a priority for our department in this term of government,” she said.

ensorl@businesslive.co.za