Private sector investment in rail ‘must be encouraged’

South Africa must find a way to encourage private sector investment in rail if it wants to see rail become a viable transport option. Peter Copley, a transport specialist with the Development Bank of Southern Africa (DBSA), told FTW that this was however easier said than done. “It is with great difficulty that one will get the private sector to invest in rail,” he said. “While there is potential for the private sector to become involved in the rail provision in southern Africa, each proposal needs to be considered meticulously, within its technical, financial, economic, social and environmental merits. And one also has to take into account that just as governments need taxes, the private sector needs revenue streams, with a degree of certainty over medium to long-term horizons.” But he believes it is fundamental to reconsider Public Private Partnerships in the region. “Too often the public sector thinks PPP means that the private sector will come in and fix things, while the private sector too frequently thinks they will fix it provided they have a guarantee of at least 15 years or longer of exclusivity.” Much can be learnt from other countries, said Copley. “Germany, France and Italy all still have very efficient, relatively short haul, stateowned rail systems, while Canada runs a publicly owned and operated system in parallel with a private sector company.” The UK essentially has a state-owned rail infrastructure and a privately operated signalling and operations system over short routes, while the US has vertically integrated privately owned systems over very long routes, fed by short haul commodity routes. Copley said while the world remained divided about 50:50 as to whether private systems or public systems were the way to go, it was important to realise that it cost a great deal of money to provide and maintain rail infrastructure. “Train operations can be run effectively on state-owned infrastructure but, even then, they cost money with limited ability to directly meet marginal cost let alone service capital costs when trying to compete with road.”