Barbara Creecy, the transport minister, will probably not be getting Christmas cards from most of her statist colleagues in the ANC this December. But she deserves flowers from the private sector and long-suffering commuters.
On Sunday, Creecy unveiled a new round of requests for information (RFI) from the private sector. In this round she is inviting the private sector to come up with innovative solutions to the state’s passenger rail services, such as an integrated ticketing solution that could do away with long queues.
This comes after Transnet, the troubled state-owned freight logistics company and one of the targets of state capture, opened slots on its rail monopoly to operate rail services. Eleven rail operating companies were identified.
In terms of these changes, Transnet would still own the rail infrastructure but allow the private sector to operate on identified lines. This came as a relief to SA’s commodity producers, who have lost billions because of Transnet’s inefficiencies, including a lack of locomotives to move their product to export markets.
For years business has been lobbying for the network industries to be opened up to competition. The process was stalled by resistance from Transnet’s previous management and a lack of policy support by the government.
This changed when Creecy was appointed transport minister. Her deputy is Mkhuleko Hlengwa of the IFP. The pair has added fresh impetus to the reform process.
Creecy can attract patient money but only if it translates social commitments into enforceable cash flows.
Sunday’s announcement – introducing the private sector to passenger rail services – is a lot trickier than subjecting Transnet to competition. As early as the 1990s, studies commissioned by the government suggested Transnet’s rail freight services be open to competition. However, successive ANC-led administrations frustrated the process, which included allowing private operators into state-owned ports.
Introducing the private sector in areas managed by the Passenger Rail Agency of SA (Prasa) will take more than a mindset change. Unlike Transnet, Prasa, which owns and manages passenger rail services such as ticketing and stations, is a utility that survives mostly on state subsidies. It has little commercial mandate.
Prasa owns urban and inter-provincial rail services, and operates in a fragmented public transport system. Except for the Western Cape, millions of South Africans opt to use urban buses and taxis to and from work daily.
Prasa’s competition has been limited; it has endured competition only in the luxury segment of travel.
Until recently rail operators, the state’s monopoly, have not been subjected to economic regulation. The introduction of economic regulation will stop Transnet from overcharging its captive customers.
On the passenger rail side, Creecy’s requests to lure private capital into Prasa is a classic market fix with a political hole. The RFI offers private capital parts including ticketing platforms, leased rolling stock, depot upgrades and monetisable fibre. Those are bankable assets with predictable cash flows. Investors can model fares, availability and asset life cycles. That’s why pension funds and infrastructure managers will listen. For them, the RFI reads as an opportunity rooted in modern trains that generate measurable cash flows and digital ticketing that creates data-driven upsides.
Factors that are not bankable, and what voters care about, are reliable services on loss-making routes and price stability. Running Prasa is a social service, a public good, that rarely pays for itself. Creecy’s assurance that ownership and subsidies remain state-held is a necessary costmetic. It will not satisfy private capital unless contracts make the state the reliable counterparty and the regulator the real enforcer.
Creecy’s RFI can be smart fiscal management or a sell-off by stealth. The difference is in governance architecture. Good deals turn private efficiency into public value, and sloppy ones turn private cheques into public headaches.
Private capital is a tool for reform, not a substitute for political will. Creecy can attract patient money but only if it translates social commitments into enforceable cash flows.
If the RFI becomes a shortcut to balance sheet relief without those safeguards, the state will have performed the neat trick of keeping ownership in name while abdicating responsibility in practice. That outcome will be ugly for commuters and costly for taxpayers.
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