Transnet CEO Michelle Phillips’ debut in implementing the Rail Network Strategy allowing private companies to use its rail network by June this year has come up against twisty tunnels as insiders anticipate higher tariffs and concerns about governance and analysts predict a hard time ahead.
Transnet is proposing a minimum access service fee in the strategy: 9.79 cents/gross ton per kilometre (GTK), a benchmark the indusry has buckled against, as it charges for the gross rather than net weight, which consequently includes the weight of the train, increasing tonnage and significantly driving up the cost.
Much debate swirls around proposed flat rates as well.
“Transnet is committed to the creation of a financially viable core network, which will culminate in the successful introduction of competition in freight rail operations.
“Through this rail reform process, we are going to witness a significant transformation in the sector which will see Transnet become both a provider of world-class infrastructure and a user of the infrastructure,” Phillips said.
The strategy emanating from the White Paper on Rail is in response to the rail sector’s opportunity cost to GDP and industries ranging from mining to citrus, automotive and others that have struggled to maintain operational momentum due to logistical problems from copper theft, derailments and port inefficiencies.
Transnet’s 21 232km network accounts for about 85% of Africa’s rail tracks, but poor maintenance and mismanagement have seen the number of goods and commodities, such as coal and iron ore, transported plunge to about 150 million tons from 226 million tons over the last five years.
Transnet said the the draft Network Statement, released on Friday, contains rules, time limits, time lines, procedures, services, charging principles, and terms and conditions governing the use of the railway infrastructure by Train Operating Companies (TOCs).
The plan lists Transnet’s plans on operational corridors and service level agreements to be entered into.
“The rail reform programme is an integral part of our recovery plan. We are confident these changes in the freight logistics sector will ultimately increase exports, economic growth, and jobs,” said Phillips.
Transnet established the interim Infrastructure Manager (TRIM) last year to direct rail infrastructure, capacity allocation, train scheduling and access charges.
The entrenched reforms stencilled on the White Paper on National Rail Policy entail vertical separation of the infrastructure and the train operating businesses of Transnet Freight Rail (TFR).
“The Rail Policy’s vision is to position rail as an affordable, competitive, reliable, sustainable and valued transport mode that provides the backbone of the South African freight logistics and strengthen the country’s economic growth and social development by 2050,” former transport minister Fikile Mbalula said at the launch in Kempton Park.
Professor Jan Havenga, of the University of Stellenbosch’s Department of Logistics. said a sliding scale, with charges adjusted across various lines, could be more effective, with higher charges applying on low-density lines to compensate for the state capture era which near broke the entity down.
National Union of Metalworkers of South Africa (Numsa) spokesperson Phakamile Hlubi-Majola said the paper had yet to be discussed at executive meetings.
Lunga Maloyi of Business Unity South Africa (Busa) said Phillips was walking a tightrope to align the strategy with private sector expectations.
“I think for business, the most encouraging thing is that through ongoing dialogue, she has shown a real approach that seeks to be consultative, but also, she has been very open to working with the private sector in terms of resolving some of the issues at Transnet,” Maloyi said.
BUSINESS REPORT