Rail roadmap outlines private investment on bulk mineral rail routes

TRANSNET Freight Rail’s (TFR’s) customers will be able to negotiate rail use rates in return for capital investment in terms of draft roadmap that stops short of privatisation.

The roadmap, which is before the South African Cabinet this week, is intended to revitalise the country’s faltering rail and ports logistics. According to media reports, the roadmap draws from policy as set down in the White Paper on the National Rail Policy and the National Commercial Ports Policy.

“It allows a clear path to address immediate challenges in the short term and the reform of the logistics system in the long term. And this is built on the existing policy decisions that have already been made by Cabinet,” Rudi Dicks, head of the Presidency’s project management office, told News24 and BusinessLive.

One aspect in this proposed liberalisation of freight logistics is the creation of a rail regulator. Contained in the White Paper, but not in the roadmap, the regulator will rule on commercial agreements and would be housed in Transnet, not TFR.

Details of how commercial deals would be negotiated are sketchy as are governance steps that would protect the independence of the regular, insofar as the proposed structure would allow for it.

On a principal basis, however, the roadmap is an attempt to meet the private sector halfway after a previous agreement to entice private sector investment on rail failed to attract more than one qualifying offer.

“It’s not about privatisation. But it’s creating more competition and investment in the various spaces where Transnet participates,” said Dicks of the roadmap. “The roadmap reinforces our position that these are strategic national assets.

“We own the infrastructure.”

TFR’s performance in the past two years has been woeful. According to some estimates, it costs the country R1bn in lost exports of minerals such as coal, manganese, chrome and iron ore.