Transport minister Barbara Creecy is working with the Treasury to find ways to enable private players to invest in helping to fix Transnet’s rail infrastructure in the short term, with new private partnership deals on the rail lines expected to take 18-24 more months to conclude.
“We will do anything legal to bring money in to invest ... in the short and medium term, because we can’t sit here and say, ‘well, this is going to take two years’,” she said, adding that the Treasury could co-invest with the private sector through the budget facility for infrastructure.
Speaking at the RMB Think Summit in Cape Town, Creecy took a swipe at business, saying it needed to “get its act together” to respond to the request for information she issued in March for private participation in five priority freight rail corridors. Though there was “massive appetite”, including from international players, for these deals, she had to extend the deadline by a month to end-May when some were not ready.
The government has opened the way for private train operators on Transnet’s lines, but the rail infrastructure itself is in urgent need of modernising and repair.
Creecy has made it clear she wants to bring private players in to upgrade and operate the lines, whether through concessions, public-private partnerships or build, operate and transfer (so-called BOT) contracts.
She issued a request for information (RFI) in March for private sector participation in five priority rail corridors with the associated port infrastructure. This delayed the process, including putting on hold some concessions that Transnet was about to put out to the market.
But Creecy emphasised on Thursday that she wanted private players to tell her under what conditions they would be interested, and deals needed to be structured before Transnet launched the formal bidding process with requests for proposals. She envisages this could be in August or September, and it would then take at least 18 months to two years to reach financial close.
Transnet and the department have been working closely with business on turning around the performance of SA’s ailing port and rail services. Transnet CEO Michelle Phillips has credited some of the group’s big clients with helping it source equipment and spares, which have helped to stabilise operations at the ports, while close collaboration on last year’s scheduled shutdown of Transnet’s key iron ore line in the Northern Cape also yielded good results.
Though Transnet’s rail volumes are still far short of their recent 220-million tonne peak in 2017/18, they have recovered in their latest financial year to 161-million tonnes, up from lows of about 140-million tonnes in 2023.
Transnet has estimated that at least R70bn needs to be spent on the rail infrastructure, including signalling.
Speaking on the sidelines of the RMB conference, an annual event that attracts about 300 fund managers and corporate clients, Creecy also reiterated that she planned to seek private investment in SA’s passenger rail infrastructure, in Prasa, as well as in freight rail. She expects to issue RFIs for passenger rail lines by October.
In a week in which the United National Transport Union (Untu) has launched strike action against Transnet, she also revealed that talks are under way with organised labour aimed at reaching an agreement that would apply across the system about how the private participation process would occur and what the terms and conditions would be.
“That may not be possible, but I think it would be better than having this insecurity of dealing with each case separately ... and in the discussions I’ve had with organised labour, they feel as [if] I do,” she said. “If organised labour is not included in the process, they can become a point of resistance.”
A workstream has been set up under the private sector participation unit, housed at Development Bank of Southern Africa, which the department established jointly with the Treasury.
Transmission projects
Also speaking at the RMB conference, the head of the new National Transmission Company of SA, Segomoco Scheppers, said the company was working to prepare seven independent transmission projects, in total just more than 1,000km of transmission lines, to ready them to go to market. The intention is to issue requests for qualification by July and requests for proposals by the year’s end, so that the projects would close in the first or second quarter of 2026.
The electricity minister recently announced the projects. Eskom’s transmission plan estimates that SA needs about 14,000 kilometres of new transmission line, with an estimated investment of at least R390bn over the next five to 10 years to support new generators, especially of renewable energy.
Moody’s Ratings on Thursday placed most of Transnet’s ratings on review for a downgrade. Moody’s said the “action reflects our growing concern over Transnet's unsustainable capital structure, its deteriorating liquidity position, lack of formal agreement so far on additional government support, and the slower than planned pace of operational improvements”.
Correction: May 18 2025
This story has been amended to read 14,000 kilometres of new transmission line.
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