Page 17 - Logistics News - September - October 2021

R AIL

Planned structural reforms

will unlock SA’s rail potential

Courtesy www.bizcommunity.com

The South African government’s proposed structural reforms to the rail sector, which will see private
rail operators operating on the country’s core rail network, will breathe new life into an industry that is
currently under severe pressure, says industry body African Rail Industry Association (ARIA).

he reforms, announced by President Cyril
Ramaphosa in October 2020 as part of the
Tcountry’s Economic Reconstruction and
Recovery Plan, aim to supplement Transnet’s capacity,
migrate freight volumes from road to rail and stimulate
broader economic growth.

The plan initially proposed a deadline of October
2021 for its introduction. Speaking at the recent
ARIA webinar, Dr Sean Phillips, head of the National
Treasury’s Operation Vulindlela unit, said that the provide a massive boost to the local rail manufacturing
current target date for enabling third-party operators in industry, with significant locomotive and wagon build
the freight sector was August 2022, with ongoing efforts programmes on the cards, ARIA says. Unlocking this capacity
underway to accelerate the time frame put on the table would also grow the rail services segment, finance markets
by Transnet. and the advisory market as specialist advisors would be
required across the supply chain.
Transferring road freight to rail
ARIA estimates that only 17 percent of South Africa’s What ‘third-party access’ really means
general freight currently moves by rail. Transnet moved Nhlapo says it was important to note that third-party
215 million tons in 2019, down 5 percent from 2018, access in this context does not mean privatisation, but
with vandalism often paralysing the country’s electric rather the use of the rail network by private-sector rail
fleet. However more than 80 percent of the country’s operators at a fee, similar to how trucks pay toll fees
36,000km network has “significant capacity”, says ARIA to access roads to move freight across the country.
CEO Mesela Nhlapo. Importantly, no new regulation is required to enable
third-party access. Regional trading partners have
The association’s research shows that 190 million already moved to this model, supporting interoperability
tons of intercity freight and 20 million tons of bulk and regional trade for pan-African operations.
commodities currently move by road every year. Of
this, around 58 million tons could move to rail almost “The value of this move to the state and Transnet
immediately, with the sectors that would benefit would be significant. Right now, we have a massive
including agricultural commodities, metals and network with excess capacity, which could unlock
minerals, cars, containers, hazardous chemicals and significant incremental cash flows through access
liquid bulk. fees from private operators. In addition, the existing L O GI S T I CS NEWS
infrastructure requires no extra state investment, as
An estimated R45-billion in rolling stock alone would be track maintenance costs should be largely fixed costs,”
required to service this volume requirement, which would says Nhlapo. •

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