KEVIN TUTANI: Railway is the future — are Prasa and Transnet ready to roll?

Globally, transport and logistics account for about a quarter of carbon dioxide emissions. The figure is expected to rise through the years. Air freight is the worst polluter, producing an average of 500g of carbon dioxide per tonne and kilometre travelled.

On the other hand, road freight is reported to produce 60-150g per tonne and kilometre travelled. Rail compares better with 30- 100g in emissions. Container ships have the least pollution, with 10-40g per tonne and kilometre. However, if we factor in electrification of the rail system, then rail achieves zero emissions.

It is crucial to also emphasise that, in 30 years from now, petroleum will be scarce, if not completely unavailable. As the world approaches a worsening climate situation and crisis of petroleum, the obvious transportation method for moving passengers and freight, will be electric railway.

It is in this awareness that the advanced and emerging economies of the US, China, Russia and the EU, are investing huge amounts in their railway networks and crafting paradigm-shifting master plans.

If the state-owned rail operators are unprepared for the transition from internal combustion engines to renewable energy, then the nation has a risky energy security strategy.

With the aim to evaluate the state of the rail companies and their preparedness to serve SA in the coming decades, some of their challenges and accomplishments are explained below.

SA has the most advanced railway system on the continent, with a network of 30,000km of track. The passenger rail operator Prasa, is struggling to control vandalism and theft, which add to operational challenges and losses.

This year, a loss of R1.7bn is expected. Vested interests such as the competing taxi industry, are suspected of having a hand in some of the vandalism, to acquire a larger share of commuters. However, investigations have not led to meaningful convictions through the years, causing the problem to persist and proliferate.

The transport ministry is working on comprehensive security plans which include law enforcement and in-house security, with the aim of addressing the theft and destruction to property. Passenger trains under Prasa are also notorious for delays and inefficiency.

Correcting this will prove crucial, as trains provide an affordable means of transportation for many low-income households, thereby addressing inequality. Increasing fares or allowing the inefficiency to continue will be tantamount to worsening inequality, which is more prevalent in SA than in most other parts of the world.

Similarly, freight carrier Transnet is battling a number of challenges which include sabotage, inefficiency and suboptimal revenue. At the end of January it offered private sector players an opportunity to bid for a 20-year lease to operate its rail container corridor between Johannesburg and Durban. This is the country’s most important and largest container corridor, providing passage to more than 60% of containers that pass through SA’s ports.

Standard global threshold

Declining revenue meant that the operator did not have the R5.5bn needed to upgrade and maintain the track, locomotives and staff for performance at full capacity to be realised. However, the offer was not taken up by business since the 20-year lease is regarded as shorter than the standard global threshold of 30 years for capital projects of that nature.

Experts also bemoaned the fact that the lessee would have to pay the wage bill for the corridor, including private security contracted by Transnet to improve safety. The company has a debt exceeding R127bn, and if revenue, which is already underwhelming, slumps, it is in danger of debt default. Coal exports, which are traditionally a major revenue earner for the firm, plunged to lows of 49-million tonnes last year, from a peak of 76-million tonnes.

The mining sector states that R50bn worth of export opportunities were lost in 2022 as minerals have had to be stockpiled due to Transnet’s inability to operate efficiently and collect commodities for delivery at the country’s ports and domestic clients in time. The figure was R35bn in 2021.

This is a threat to SA’s economy as failure to manage export and domestic industrial logistics requirements means that widespread businesses will incur steep losses. As a result, some miners are on the brink of laying off personnel and government revenue is suffering.

To its credit, there are some projects that Transnet has executed in an excellent way. One such is the Mamathwane crossing loop in the Northern Cape, which was completed ahead of the targeted timeline and will remove 40,000 freight trucks off the route each year.

Sabotage

The freight rail operator is also struggling with rampant cases of sabotage, which, if left unresolved, will eliminate the operational viability of the state-owned company. Revitalising the state-owned rail companies, sets the nation on the best path to deal with the inevitable transport and logistics transformation which awaits.

The US, has the largest rail network in the world (225,000km). It is also rated as the most efficient (for freight) as it has a 40% share of total long-distance freight volumes, domestically.

Concurrently, it is extremely profitable. It is vital to state that the overall rail network in the US is mainly controlled by the private sector, with all freight movements, under private firms. A 2018 study by the American Association of Railroads reported that seven of the largest railroad operators contributed over 1% to US GDP and created more than 1-million jobs.

On the other hand, the government-owned passenger rail company (Amtrak), rents some of its track from the private sector and is a loss-making, inefficient entity. Amtrak has a repair backlog of $45.2bn, serves loss-making corridors and is regularly unpunctual.

Nevertheless, what SA can emulate and learn is that, private sector involvement in railway is imperative for growth. A valuation of rail assets and incorporating private capital is advisable.

If refurbishing the whole 30,000km network is expensive, then joint investments on key lines such as those leading to Durban, Richards Bay, Cape Town and Saldanha Bay, on a corridor basis (one at a time) are encouraged.

• Tutani is a political economy analyst.