Calls for urgent action as nearly a third of freight rail volumes lost in …
Transnet’s volumes have significantly declined.
- Transnet volumes are expected to have declined 30% in the past five years.
- The industry association said the implications for South Africa’s future are significant.
- Industry must coalesce and support government’s reform plans and agenda.
- For more financial news, go to the News24 Business front page[1]
The African Rail Industry Association (ARIA) has highlighted the urgent need for action as South Africa’s railways face terminal decline.
ARIA chairperson, James Holley, said Transnet is anticipated to have moved between 155 and 160 million tonnes in the financial year ending 31 March 2023 – representing a more than 30% decline from the 226 million tonnes moved in 2018.
“The implications for the country’s future are significant, and we seem to be approaching a critical inflection point with regards to our railways,” Holley said during a web event on Thursday.
“If we don’t change direction quickly, the ramifications for our industry are very concerning, but perhaps more so are the consequences for the upstream economy.”
Jan Havenga, an independent researcher and a professor at Stellenbosch University, said the loss to GDP of general freight was about 2%.
It “has been slowly creeping up on us, and it’s getting more every year every year”, he said, adding:
That is just a cancer that we cannot afford as a country anymore.
Holley said the only solution ARIA can see for rail recovery is to coalesce and support the government’s reform plans and agenda.
“We have a gazetted rail policy.… We took 14 years to develop a progressive policy that can ignite the South African economy. Now is the time to implement the policy and no longer to debate it,” he said.
Havenga said Transnet’s rail network is too large and requires restructuring. This may include ring-fencing and corporatising certain low-density and export corridors while maintaining a core network.
“We can have a vertically integrated or separated railway; we definitely need a horizontal separation between low and high-density lines,” he said.
Track infrastructure investment is potentially the most difficult problem to solve in the rail industry today, and ARIA estimates that more than R100 billion needs to be spent to restore track integrity.
But ARIA believes Transnet’s ability to raise further capital will be constrained, while the realities of South Africa’s fiscal position suggest that National Treasury will unlikely provide the level of grant funding required to restore railway infrastructure.
“This leaves one source of funding remaining, which is the private sector,” said Holley. “The good news, great news, is that the appetite to do so most certainly exists. The appetite is there because the underlying freight volumes are there.”
What is needed urgently now is the framework to guide implementation, Holley said. “The vertical separation of railways into the roles of infrastructure owner, infrastructure managers and train operating companies, together with the Private Sector Participation Framework are critical for this success.”
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Implementing third-party access is also critical, said Holley.
“ARIA fully supports the implementation of the Regulation of Transport Bill, the Rail Masterplan, and the Rail Transportation Bill. However, ARIA does not support the notion that third party access should wait for these to be implemented … we do not believe the rail industry, nor the economy, can afford to wait any longer.”
Havenga said private sector involvement should be mandated. “Transnet has a raw deal at the moment. They inherited a very difficult situation. But what I don’t see them doing is taking on board all the assistance and advice that people are willing to give them freely,” he said. “I want them to work with the private sector immediately just to get some of the bottlenecks out of the way and to make vertical separation real.”
While the latest statistics are not accessible, passenger rail volumes are also dire and estimated to be more than 80% lower than in the late 2000s.
The primary reform for passenger rail is the devolution of the Passenger Rail Agency of South Africa (Prasa) into the metros – the appetite for which Aria says is encouraging.
“While we cannot fool ourselves that there is a long road ahead of us, the fact that Prasa is on track to spend its Capex budget for the first time since 2016 needs to be recognised, and just might represent the first real signs of progress in passenger rail that we have seen for some time,” Holley added.
References
- ^ News24 Business front page (www.news24.com)
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