South Africa To Allow Private Firms To Run Trains

The President Cyril Ramaphosa government of South Africa has indicated that it will private entities to run trains on the country’s freight rail network.

According to the government, the move is aimed at boosting efficiency as state-owned logistics firm Transnet struggles to keep up with demand.

Transnet runs South Africa’s freight rail and port services. But it has reportedly has faced equipment shortages and maintenance backlogs worsened by widespread cable theft and vandalism, prompting the government to seek private sector involvement.

South Africa’s Minister of Transport, Barbara Creecy says 11 out of 25 train operating companies that applied for access to the freight network had met the requirements and will proceed to the next stage of negotiations and contracting, without naming the companies.

South African logistics firm Grindrod (GNDJ.J), opens new tab said on Friday it had been granted access to the Transnet network.

“(The companies) are not cannibalising Transnet freight, they are adding capacity to what Transnet freight is already carrying,” Creecy told reporters.

The firms secured slots across 41 routes, with the initiative targeting routes used to transport bulk commodities like coal, iron ore, chrome, manganese, sugar and fuel.

Contract conditions include railway safety permits, rolling stock readiness and securing port offloading capacity. Slot durations will range from one to 10 years, Creecy said.

This year, the government has extended 149 billion rand ($8.42 billion) in guarantees to support Transnet’s recovery but says it has limited resources to fund infrastructure development and address logistics backlogs.

Creecy said Transnet was also seeking 35 billion rand in infrastructure funding from the government this year.

Transnet’s freight rail volumes dropped to 152 million metric tons in the 2023/24 financial year, down from a peak of 226 million metric tons in 2017/18.

The new operators are expected to carry an additional 20 million tons of freight annually starting from the next financial year, advancing the government’s goal of transporting 250 million tons by rail annually by 2029, Creecy said.

The operators could add 10 million tons of coal export capacity over the next three years, she added, from current levels of around 50 million tons.

Bulk mineral exporters such as Kumba Iron Ore (KIOJ.J), opens new tab and thermal coal exporter Thungela Resources (TGAJ.J), opens new tab have been forced to curtail production to align with Transnet’s limited capacity.

Source:Africa Publicity