Transport Minister Barbara Creecy confirmed that Transnet will issue requests for proposals (RFPs) from the end of August to begin the formal procurement process for private sector participation (PSP) across five priority rail and port corridors.

In her Budget Vote address to the National Assembly, Creecy reiterated that the limited availability of State resources to fund infrastructure development made private sector investment critical, albeit under a framework whereby rail lines and ports would remain under public ownership.

She said the recently concluded request for information process would guide the RFPs for private investment on freight-logistics corridors that moved key mineral exports and containers.

However, she also stressed that South Africa could not wait for these PSPs to reach financial close (a process that is expected to take two years to complete) before rehabilitating Transnet’s rail network and rolling stock, as well as port infrastructure and equipment.

She said three funding sources would be tapped for the immediate rehabilitation effort, including:

• Transnet’s budget for rail and rolling stock maintenance and the purchase of port equipment, which was currently underpinned by government guarantees and which was likely to receive additional guarantees in July;
• submissions to the National Treasury’s Budget Facility for infrastructure (BFI); and
• private investment in refurbishing or expanding line capacity through existing customer agreements.

In a media briefing, Creecy confirmed that Transnet had submitted an initial application under the BFI for about R16-billion and would also seek another R14-billion when the next quarterly bid window opened in October.

No immediate indication was provided as to what projects the BFI funding would support, but she expressed optimism that Transnet would secure the funding.

Creecy also provided no estimate for the possible investments that could be unlocked through co-funding arrangements with existing customers, or how such customers would be compensated.

Much would depend, she indicated, on the framework being developed with the National Treasury for such co-funding, which would clarify what was legally allowable and the compensation mechanism.

The Minister also confirmed that she would be seeking to address vacancies and capability gaps on the Transnet board, including by appointing a Chartered Accountant and two individuals with rail industry experience.