Efforts to rescue South Africa’s rail system will be doomed unless Transnet’s debt is restructured. This is according to Professor Jan Havenga, macro logistics expert from Stellenbosch University.
Speaking at Hortgro’s technical symposium in Somerset West, Havenga said with debt amounting to R130 billion, the utility had to pay R1bn per month in interest alone.
This leaves insufficient funds for the infrastructure maintenance and upgrades necessary to get the rail freight system fully functional again.
Havenga, who has done extensive research on the country’s logistics chain, estimates that the country’s GDP would have been 5% higher had Transnet functioned the way it should. Currently, dysfunction in the country’s logistics system costs the country R1bn per day.
Throughput of general freight on rail last year reached the lowest point since the Second World War, and the throughput of coal transported by rail reached the lowest point since 1993.
Havenga explained that it was due to the enormous debt load that the proposed tariff for private rail operators to use Transnet’s rail network was so high.
The rate of R19.79 per gross tonne per kilometre, proposed in Transnet’s draft network statement, includes a private operator’s use of infrastructure as well as maintenance of all the rail network and its associated infrastructure. Last month the agricultural business chamber Agbiz warned that this rate was prohibitively expensive.
Havenga said some of the bigger contenders in the private rail space may take up a few rail slots at the inflated price, but in his opinion Transnet’s management itself knows that the proposed model is not viable.
He said of the total amount of mining freight transported by road, 40% should be on rail. Ore transported by road is ferried along roads designed for agricultural purposes, severely damaging these roads and harming rural economies.
Of the total amount of road freight used by intermediate manufacturing, 65% should be on rail, along with 70% of finished palletised goods. Of the goods for rural extraction and delivery, 90% of what was currently transported by road should be transported by rail, he said.
