Opening South Africa’s rail infrastructure to private operators would see significant investment in the sector, unlocking huge economic benefits and creating jobs across a range of industries.It would in addition boost bulk operations significantly, allowing for the state operator to continue focusing on its world-class heavy-haul long-distance operations.According to James Holley, CEO of private rail company Traxtion, the huge amount of latent capacity in the current rail network has to be unlocked to deliver much-needed economic growth.“From a bulk rail perspective Transnet Freight Rail (TFR) does an incredible job. The iron ore line is world renowned and the coal line has seen major improvements in recent years. Those volumes are the heartbeat of TFR,” he says. “We have to look at what sectors in our economy are underutilising the rail sector. If we look at the coal industry, the iron ore industry, the manganese industry, those industries are highly rail intensive. TFR services the bulk commodity sector well and there is certainly not much appetite from the private sector to step into that space.”According to Holley only a third of the country’s current rail capacity is being utilised. With some 36 000km of track, it remains an incredible potential resource for the country, in his v iew.He says opening the rail to multiple operators would generate additional revenue for Transnet through access fees (much like toll fees on road) that would in turn provide it with a new revenue stream to improve its financial position. Furthermore, these fees would allow for investment back into the network. “That would see the rail network condition improved – and that in turn would enhance the national competitive advantage of rail.“There is no denying that the rail industry is extremely capital intensive,” says Holley. “A potential investment of $1 billion would cover 175 locomotives, the required rolling stock and associated investments in supporting infrastructure. To put that number of train sets in perspective, Transnet currently has a f leet of more than 2 500 active locomotives, so $1 billion would just be the first step towards what is needed.”Often investments into rail are not commercially viable on a stand-alone basis, but the economic impact of investment into rail track infrastructure is significant. More operators will mean more investors.Holley maintains that opening the rail infrastructure to private operators will have no adverse effect on Transnet. “TFR will retain control over its key cargo f lows, including coal, iron ore and manganese. The role of private sector operators should be to source incremental volumes currently moved by road to rail, or to unlock new upstream investments. This would not diminish Transnet’s existing f lows, but would bring significant additional f lows – such as containerised cargo, agricultural and forestry products, and hazardous chemicals – to rail.”
