Transnet has underspent on maintenance of rail infrastructure by at least R27-billion over the past decade, according to an analysis by the African Rail Industry Association. (Photo: Dean Hutton / Bloomberg via Getty Images)
Transnet has underspent on maintenance of rail infrastructure by at least R27-billion over the past decade, according to an analysis by the African Rail Industry Association (Aria).
But Aria’s chief executive, Mesela Nhlapo, said underspending by the state logistics company could amount to double that figure considering the state of the country’s rail infrastructure.
She was speaking at a media roundtable on Thursday last week where she and other panellists spoke about what the cost of Transnet’s deterioration will cost the economy.
This is after Transnet workers embarked on a two-week strike last month, causing the company to declare another force majeure — the fourth in a year and a half — which is said to have cost the economy R1-billion a day.
“We are in denial about what is taking place at Transnet,” Nhlapo said. “Transnet is supposed to act in the best interest of the country. That’s why they are there. That’s why they need to ensure that the freight runs seamlessly. And failure to do so it’s negligence. Infrastructure is the backbone of the economy.”
Nhlapo said Transnet faces a slow but imminent collapse, which will have a huge effect on the country’s economy. She advocated for reforms that would break Transnet’s monopoly over the country’s rail freight network by bringing the private sector into the fold.
Aria, which represents rail operators and rail component manufacturers, has called for the speedy implementation of reforms allowing greater private third-party access, which is at the heart of South African rail reform.
The National Rail Policy, released earlier this year, notes that Transnet only addresses a fraction of the freight rail market because of inadequate capital and operational inefficiency.
The classic remedy to tap into the larger freight rail market is to allow third party access, the policy document reads. “Third party train operators must therefore be admitted to the national rail network to access the infrastructure in conjunction with commitment to investment-led intervention.”
Aria has accused Transnet of imposing restrictive terms and conditions on private third-party freight operators.
The tension between the approaches outlined in the National Rail Policy and by Transnet has been exacerbated by the state entity falling outside the ambit of the department of transport, which oversees the policy, Nhlapo suggested.
She added that there is an urgent need for reforms amid a need for private sector investment in the freight network. Transnet also needs to clear its maintenance backlog, she said. Poor rail infrastructure stands to hamstring private sector uptake.
“There will be no private sector investment in either rail or the upstream economy if there is no proper third-party access, as it offers no long-term prospects for potential investors. Nobody in their right minds will invest into rolling stock and have them standing waiting for reform to arrive.”
She said Transnet must consider concessioning out the core network to the private sector, Nhlapo added. This will stem the state company’s losses and unlock billions of rands in investment into maintenance.
There has long been resistance to the privatisation of the country’s state-owned entities, with critics arguing that it will result in profit maximisation being put above the interests of the public with little guarantee that services will improve.
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