{"id":6987,"date":"2022-04-27T09:35:09","date_gmt":"2022-04-27T09:35:09","guid":{"rendered":"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale"},"modified":"2022-04-27T15:45:17","modified_gmt":"2022-04-27T15:45:17","slug":"african-rail-industry-association-welcomes-transnet-rail-sale","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale","title":{"rendered":"African Rail Industry Association welcomes Transnet rail sale"},"content":{"rendered":"

Africa-Press – Angola. <\/strong><\/span>Transnet has announced that it will sell slots of its rail network to third parties in an effort to liberalise the the rail sector, but the African Rail Industry Association (ARIA) argues that current terms placed on the table by the state owned company may limit investor appetite.<\/b><\/p>\n

Transnet Freight Rail (TFR), the state-owned logistics company\u2019s biggest of six operating divisions with reported revenue of R39.4bn ($2.5bn) in 2021, announced the commencement of a rail slots sale at the beginning of April.<\/p>\n

Third-party operators have until 31 May to submit bids, and TFR is expected to announce winning bidders on 30 June.<\/p>\n

\u201cWe think it [access] will bring prices down. We need this,\u201d says Mesela Nhlapo, CEO of ARIA.<\/p>\n

\u201cBusiness is ready to invest, and that\u2019s what the president wants. But the market must be investor friendly,\u201d Nhlapo says.<\/p>\n

In total, 16 slots are open to interested investors: six slots on the Durban to Johannesburg corridor and ten on the Gauteng to East London corridor.<\/p>\n

Durban to Johannesburg, known as the container corridor, links to inland container terminals in City Deep, Kascon, Pretcon, and Kaalfontein; and Gauteng to East London, referred to as the south corridor, is important for manufacturers, the automotive industry, and agriculture.<\/p>\n

Winning bidders are obligated to obtain licences from the rail regulator, after which the third-party operators will be permitted to move cargo on rail around October 2022.<\/p>\n

TFR is the infrastructure owner and operator on an estimated 31,000km of rail track covering a 20,911km route, making it the 11th-largest rail network in the world according to the government. TFR operates a core network route spanning 12,801km.<\/p>\n

TFR has separated its accounts into infrastructure and operator in preparation for third-party access \u2013 part of long-awaited rail reform as articulated in the 2017 White Paper on National Rail Policy and now included in the Ramaphosa administration\u2019s Operation Vulindlela, an expedited programme of structural reforms.<\/p>\n

Capital Costs<\/b><\/p>\n

But ARIA, the representative body for original equipment manufacturers, rail operators, and rail component manufacturers, also argues that the current terms placed on the table by Transnet are a potential hindrance to investment.<\/p>\n

According to ARIA, a 50-wagon trainset has a R200m price tag, and the organisation estimates that operators will need three such trainsets on each of the 16 slots, bringing projected investment costs to R600m per slot for third parties.<\/p>\n

Moreover, it is widely understood that during the first phase of third-party access to TFR\u2019s rail network, private sector operators will have ownership of the slots for only 24 months (from 2022 to 2024). ARIA says no private sector player has the risk appetite to invest large sums of money for equipment with a 30-year lifespan only to have access to the rail network for two years.<\/p>\n

I think that if Transnet executives come to an information session, and they have not thought through the two years, and the costs of the locomotives and the rolling stock in general, there\u2019s a problem.<\/p>\n

Also according to the terms, Transnet will offer rail access on a voetstoots basis, meaning any infrastructure defects detected and uncovered on the slots will be for the third parties\u2019 consideration. Transnet will neither provide nor guarantee security on the network, which has fallen victim to vandalism of rail track, and theft of overhead cables and signalling system equipment.<\/p>\n

In 2021, TFR reported that there were more than 500 arrests made nationally in connection with the theft of rail equipment and pipeline products (mainly fuel).<\/p>\n

On 8 April, TFR and Transnet group leadership held an information sharing session with an estimated 140 participants from the private sector, including ARIA members, Nhlapo, and banks\u2019 representatives, about the terms and conditions of the slots sale.<\/p>\n

\u201cThe slots sale information session held on 8 April was extremely well attended, with more than 70 participants attending in person and at least as many virtually. We have had interest, and indications that there are companies \u2026 [that] would like to progress discussions,\u201d says Clement Maphaba, TFR\u2019s manager for corporate affairs.<\/p>\n

\u201cIt\u2019s a long game. It\u2019s not investment friendly. After the information sharing session, we saw that the terms are unreasonable,\u201d Nhlapo says.<\/p>\n

\u201cI think that if Transnet executives come to an information session, and they have not thought through the two years, and the costs of the locomotives and the rolling stock in general, there\u2019s a problem,\u201d Nhlapo says.<\/p>\n

Rail Versus Road<\/b><\/p>\n

Since the mid-1990s, South Africa\u2019s general freight \u2013 excluding coal and iron ore \u2013 has steadily moved from rail to road because of inefficiencies at Transnet, which has a monopoly on rail, and at the country\u2019s ports and port terminals.<\/p>\n

\u201cI know there are trucks that go to the DRC [Democratic Republic of the Congo] from the North West carrying maize. That road transport is more efficient than rail,\u201d Nhlapo says. \u201cTo get a service like that from a local operator, meaning Transnet, is a pain.<\/p>\n

\u201cIt takes a long time to get results, whereas truck owners are more efficient and reliable.\u201d<\/p>\n

Despite the issues with the terms attached to the slots sale, Nhlapo says: \u201cThe opportunities are there. The infrastructure is underutilised. There is a \u2026 market for the private sector.\u201d<\/p>\n

\u201cIt is a good move. It\u2019s long overdue,\u201d says Jackie Walters, a transport economist at the University of Johannesburg.<\/p>\n

\u201cIf you don\u2019t have the capital costs, a two-year concession is going to work in the short term. It can work because your risks of entering will not be that high,\u201d Walters says.<\/p>\n

\u201cBut the big problem is security. Transnet can\u2019t guarantee the coal line to Richard\u2019s Bay, and it is looking at a force majeure on that. What will happen on the Durban line \u2013 and the other lines [being opened to third-party access]?\u201d Walters says.<\/p>\n

\u201cRail is depleted. Transnet can\u2019t guarantee services. The only alternative cargo owners have is to use road transport,\u201d Walters says.<\/p>\n

\u201cThere [road], you have some guarantee of up-lifting. Although costly, you have time guarantees. You can operate factories on a just-in-time basis.<\/p>\n

\u201cBut with rail you cannot do that. The service is so poor that most of the cargo has moved to road. We have to get the traffic back on to rail,\u201d Walters says.<\/p>\n

For More News And Analysis About Angola<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Angola. Transnet has announced that it will sell slots of its rail network to third parties in an effort to liberalise the the rail sector, but the African Rail Industry Association (ARIA) argues that current terms placed on the table by the state owned company may limit investor appetite. Transnet Freight Rail (TFR), […]<\/p>\n","protected":false},"author":84,"featured_media":6986,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6,8,16],"tags":[233,337,329],"class_list":["post-6987","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","category-homepage-english","category-twitter","tag-africa-press","tag-africa-press-angola","tag-angola"],"yoast_head":"\nAfrican Rail Industry Association welcomes Transnet rail sale - Angola<\/title>\n<meta name=\"description\" content=\"Transnet has announced that it will sell slots of its rail network to third parties in an effort to liberalise the th ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"African Rail Industry Association welcomes Transnet rail sale\" \/>\n<meta property=\"og:description\" content=\"Transnet has announced that it will sell slots of its rail network to third parties in an effort to liberalise the th ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale\" \/>\n<meta property=\"og:site_name\" content=\"Angola\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2022-04-27T09:35:09+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-04-27T15:45:17+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/angola\/sites\/65\/2022\/04\/img-626964f30676a.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1458\" \/>\n\t<meta property=\"og:image:height\" content=\"972\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/angola\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"African Rail Industry Association welcomes Transnet rail sale\",\"datePublished\":\"2022-04-27T09:35:09+00:00\",\"dateModified\":\"2022-04-27T15:45:17+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale\"},\"wordCount\":1051,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/angola\/sites\/65\/2022\/04\/img-626964f30676a.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Angola\",\"Angola\"],\"articleSection\":[\"all news\",\"files\",\"homepage-english\",\"twitter\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale\",\"url\":\"https:\/\/www.africa-press.net\/angola\/all-news\/african-rail-industry-association-welcomes-transnet-rail-sale\",\"name\":\"African Rail Industry Association welcomes Transnet rail sale - 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