Stop rail infrastructure deterioration before privatisation says Sacob

Alan Peat SACOB HAS slated what it terms "shadow corporatising" in the pre-privatisation restructuring plans for Spoornet. "If corporatising means simply issuing shares with a government ministry holding all the stock, improvements will not be made," it says The chamber suggests that what is needed is a concerted effort to reverse the continuing deterioration of the rail infrastructure - a reversal of the high tariff structure - and improvements in levels of service. "This will require more than the reshuffling of management or a change in reporting relationships." In its view of things, Sacob advocates "the benchmarking of Spoornet against world best practice in order to determine the best way of achieving these improvements". It agrees, however, with the restructuring proposal that Spoornet be corporatised with its different business units becoming separate corporate entities. "We support this as a first step towards privatisation," it said. "But each business unit must be financially ring-fenced, and cross-subsidisation between the units must be eliminated." Sacob highlights that specific attention must be given to the elimination of cross-subsidisation into Spoornet's "substantial" loss-maker, the general freight business (GFB). This is due to be commercialised, and then either an initial public offering will be made, or a strategic equity partnership will be entered into. The proposed concessioning of CoalLink, Orex, LuxRail (Blue Train) and LinkRail must also be financially ring-fenced, it added. This to prevent cross-subsidisation with loss-making units like GFB. In this concessioning, the chamber encourages the use of "globally recognised methodology". This, it added, should comprise a communications plan; a public policy plan; a concessioning plan; a legislative plan; and a public offering or strategic equity partnership agreement. Sacob also expresses the strong opinion that any restructuring needs to take into account the entire transport logistics chain. "Portnet, container terminals, road transport, shipping lines and other service providers all need to be functionally integrated," it said, "if the SA transport industry is to provide the service required by its international trading community, and for it to be globally competitive." This taking into account the interfaces between modes and other service providers and possible impacts on them from individual restructuring. Sacob believes that the process for restructuring Transnet should be to separate infrastructure from rolling stock.