There are myriad of challenges plaguing State-owned rail operator Transnet Freight Rail (TFR), ranging from infrastructure and security to skills shortages; however, several interventions are under way to mitigate this – but it will take time to successfully implement these.
Challenges outlined ranged from a lack of infrastructure and maintenance to security along the rail network, and skills shortages, with speakers positing that there had been an exodus of skilled personnel over the years owing to a difficult working culture at the companies.
However, it was highlighted that there were several initiatives being pursued to rectify this, including bringing in private-sector participation. It was emphasised that the objective was to increase private-sector involvement in the sector and along the rail network, as well as to fill gaps where Transnet fell short, rather than privatising the entity.
The biggest step being taken by the Transnet group is the implementation of a dedicated Infrastructure Manager (IM) function within TFR by October 31, effectively separating the infrastructure and operational aspects of the rail business in preparation for this considerable expansion of third-party access to the network.
It was highlighted that setting up an IM came in response to the National Rail Policy of 2022, which stipulated that there should be a split between infrastructure and train operations to facilitate third-party access across the network and to revitalise rail and rail investment.
It was noted that Transnet was undertaking this in a phased approach. The first phase, the establishment and proprietary phase, would run from October 31 through to April next year, so that the entity was able to receive operators from next year.
The next phase will entail transitioning to a regulated entity and will run from about April 2024 to April 2025.
The last phase will entail the entity operating in a way envisioned in the National Rail Policy.
It was highlighted that the market had already been tested with some of these elements, with Phase 1 of slot sales having started last year and this was still ongoing.
Key learnings from both Transnet and the market in terms of how they engage, and the conditions, are being taken into consideration for the phased approach process.
It was also highlighted that setting up of an IM is being run like a programme, so as to ensure defined deliverables and a proper timeline.
The organisational design work around this was indicated to be almost complete, as well as the accounting separation, with additional work now being undertaken.
It was highlighted that the aim was to have as much work for this complete by the end of this month, so that by the end of October, the demo work could begin.
The importance of taking labour along this process was also highlighted, as well as international benchmarking to make sure that lessons were adhered to.
Transnet South Africa chief strategy and planning officer Dr Andrew Shaw pointed out that part of Transnet’s strategy was to draw in private sector involvement in segments it was dominant in, in a way that leveraged the opportunity to deliver and improve volumes.
Shaw highlighted benefits that would emerge from an IM as including improved infrastructure management, enhanced safety, increased capacity, efficiency gains, environmental benefits, alignment with the National Rail Policy, facilitation of economic growth, facilitation of international trade, reduction of congestion on roads, and long-term sustainability of transportation.
Also mentioned during the roundtable was the need to modernise and maintain the network.
Moreover, it was indicated that Transnet was also setting up a leasing company to help facilitate entry into the market for operating companies and to help them overcome barriers.