AYANDA SHEZI: Transnet makes headway in bringing private sector players on board

The rail reform under way in SA is a welcome — albeit overdue — prospect which has afforded Transnet an opportunity to play a leading and defining role in changing the trajectory of the industry and the national economy.

An unfortunate impression has been created that Transnet is resisting the imminent changes to the freight rail landscape, yet nothing could be further from the truth. Long before the idea of rail reform gained prominence in some quarters, Transnet was already reviewing its strategy with the aim of, among other things, introducing private sector players onto the main line and reforming internally to align with the expected new regulatory model.

As part of the reform programme Transnet has embarked on, enabling third-party operators to access parts of the network and encouraging private investment in rolling stock and terminals are key areas of focus. This is a fundamental shift in the way freight rail has operated in the country. While the network has been available to third-party operators in the passenger and tourism space for many years, with the likes of the Passenger Rail Agency of SA (Prasa), logistics group SAFLog and Rovos Rail using the network, the introduction of train-operating companies to move freight on the main line is a first.

Third-party access is not an instant or “quick-fix” task where Transnet Freight Rail (TFR) merely auctions off slots and, based on the number of responses received, is either judged a success or a failure. It is a process — an urgent one for TFR — in which our customers and shareholder want to be assured that we have a plan to evolve into an innovative rail company, actively driving economic growth.

This requires a responsible and methodical approach as we progressively open up the SA rail market in the interests of all parties and, more importantly, in the interests of the economy. Transnet has studied a number of rail reform models, including those from Germany, Australia, Brazil and the UK, in formulating what would work best in the SA context.

We understand there are parties with vested interests and perhaps an inherent cynicism who would delight in this process failing. For them, the glass is always half-empty and emptying quickly.

At Transnet, we tend to see the situation differently. We have a solid and focused leadership team, a world-class corporate strategy to revitalise the business, and some exciting ideas around the growth of our rail and port assets. We see the glass as half-full, and filling.

Milestone

Despite criticism from day one, the reality is that the sale of the first slots to Traxtion Sheltam, announced last week, was a significant milestone in the revitalisation of SA’s freight rail network. To us, no matter how small it may seem to the critics, this marks the beginning of a new phase of growth for Transnet, for meaningful private sector involvement and for our shareholder’s commitment to bring in private sector support on key infrastructure projects.

It is particularly important in an environment in which the national fiscus is taking strain, and Transnet’s own ability to leverage new financing is inhibited. Crowding in the private sector is also a way for Transnet to raise much-needed revenue in the form of track access charges, especially on parts of the network that are underutilised.

Let’s put aside the cynicism and look at the slot sale details. From April 1 next year, once all the safety and contractual obligations have been signed off, the first component of Transnet’s freight rail network will be run by a private company, running three trains a week between Kroonstad and East London.

Transnet is looking forward to this development, not only because it will improve freight rail capacity but because it is a first step towards greater things. The Traxtion Sheltam agreement will allow us to assess and refine the dynamics around having a private train-operating company run on our networks, and to bed down what we mean when we talk about private sector participation.

It is an idea that has been in incubation since 2021, when we first committed to expanded third-party access. In implementing this we have learnt valuable lessons around the way we have scoped this access, and what the enablers are that are required to make it work.

Next slot sales

We are more committed than ever to bringing in additional private sector partners. We are developing a timeline for the next phase of this process, and for the next slot sales, as we firmly believe they are a vital step in increasing rail capacity and growing the economy.

There are certainly challenges — the same constraints faced by Transnet, including cable theft and infrastructure vandalism — that the private sector will have to confront, but perhaps this offers an opportunity to jointly explore lasting mechanisms to deal with the scourge once and for all, alongside other mechanisms the government has already introduced.

There are other initiatives Transnet will be bringing to the market soon which will further expand access to the private sector in rail operations. These efforts are focused on ensuring that rail-dependent supply chains within the economy operate at globally competitive levels, that rail can be sustainably expanded and modernised, and that the competitive environment within rail is strengthened, particularly for the transport of value-added goods and the promotion of intermodal solutions. There is also a particular focus on moving traffic from road to rail on some of our most intensively used corridors.

Alongside this, we are continually improving other key freight rail corridors, including the Cape corridor, which carries bulk manganese and general freight, and the need for more capacity on the network that will support new motor manufacturing plants in Gauteng.

In our view the positives far outweigh the negatives — and the picture of doom and gloom painted by some. It is true that the past few months have been difficult for Transnet, and for TFR in particular. However, the will is there, the knowledge is extensive, and the commitment remains unquestionable to turn Transnet around so it can be the economic growth enabler we know it can and should be.

• Shezi is Transnet spokesperson