‘Spoornet concessioning would be social and economic disaster’

Alan Peat
IT MAKES no economic sense to split up Spoornet into its various entities and privatise, according to Jane Barrett, policy research officer at the SA Transport & Allied Workers Union (Satawu).
She said government had made a commitment to organised labour and Spoornet management that the railway system would remain as is, but with a restructuring plan for future investments and efficiency improvements.
This she said in response to the growing call from the private sector users - many of whom find the railways’ inefficiencies financially crippling - that certain of the entities in the Spoornet stable could be privatised.
“The government has investigated the best model for an efficient system,” said Barrett.
“And it proved conclusively that it would be a social and economic disaster for the railways to be split up and the bulk operations of Coallink and Orex to be concessioned to the private sector.”
Even if all the proceeds from this concessioning were channelled into the current loss-making general freight business at the railways, she said, this section would still be financially unviable for the next two decades.
That, according to Barrett, would leave government a choice of subsidising general rail freight for the first time, or closing rail lines and cutting back on general freight traffic.
It also doesn’t fit international
experience.
“Worldwide freight railways have always relied on economies of scale for their success,” said Barrett.
Also on a traffic mix of bulk and general cargo, she added, with bulk generating the easy profit.
“Cross-subsidisation between bulk and general freight operations is usual in almost every freight railway system,” Barrett told FTW, “including those in Brazil, Canada, Germany, Italy, India and Japan.
“Where this cross-subsidisation has been stopped through the break-up of the system into a number of usually private companies, general freight operations have been all but eliminated.”
She cited Argentina and Mexico - where 90 000 and 70 000 job losses respectively were recorded - as two examples of this situation.
“There’s an agreement over keeping Spoornet as it is,” she told FTW, “and there is a plan to keep the railways from requiring a subsidy, and a restructuring agreement.
“So let’s go ahead and make it work.
“As long as the arguing goes on, this aim is thwarted.”