Transnet Freight Rail (TFR) is little more than a year away from completing internal work to allow third-party train operators onto its main network, a key platform in reviving the economy.
TFR CEO Sizakele Mzimela said in an interview with Business Day that two concurrent streams of work should be completed in about 15 months to position the state-owned rail and train operator to start opening its six key corridors to private operators.
Smaller feeder railway lines, called branch lines, have already been opened to private operators but this programme has met with mixed success, prompting TFR to overhaul its strategy to ensure commercially viable operations in this part of its network.
Bringing private operators onto SA’s rail network is one of the key areas of structural reform identified by President Cyril Ramaphosa in his overhaul of the economy to kick-start investments and job creation amid the Covid-19 pandemic.
Pravin Gordhan, minister of public enterprises, said recently that private operators would be introduced onto the main network within three years.
The six main lines are used to haul bulk commodities and general freight. Of these the Durban-Johannesburg line is underutilised, moving about a fifth of annual freight between the two cities.
TFR is halfway through a six-month accounting process of separating the cost of infrastructure from the operations using that infrastructure so that it can formulate tariffs for third parties using it, Mzimela said.
Limited slots
Running concurrently with the six-month process is an 18-month physical commercial separation of these two elements of the company’s business. Once that was done a decision could be taken on bringing third-party operators onto the main rail network, she said.
For third-party operators to come onto the main line, TFR wants to be certain they can sustainably and reliably provide economically viable trains for the limited number of slots available to use the network, particularly now that theft has constrained the use of railways, Mzimela said.
“From a principle perspective, my view is that for anyone on a branch line [who] says, ‘I have sufficient volume to move onto the main line directly to the port’, we wouldn’t be opposed to that, but do they have sufficient volume,” she asked.
TFR has opened concessions on branch lines, which are feeder lines to the main network, but this has been unsuccessful, prompting a year-long review of the strategy.
One of the reasons was that third parties had to pay for the refurbishment and maintenance of the infrastructure, pushing some private companies into business rescue. TFR was now providing branch lines that were operationally ready.
Tourism focus
One of the major branch lines to be opened to concession is the refurbished railway between the port cities of East London and Gqeberha, the recently renamed Port Elizabeth. It should come to market in August after the third wave of the pandemic prevented TFR launching the concession in June, said Mzimela.
Other branch lines coming to the market were mainly focused on tourism, she said without being specific.
Addressing the criticism of private train operators that these lines were too short, did not give them access to ports, relied too heavily on cyclical businesses such as fruit and vegetable production, and had volumes too small to make economic sense, Mzimela conceded the point and suggested rail operators should bid for clusters of branch lines to give their businesses scale and diversity.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.