South Africa’s rail network, which currently represents about 20% of general freight market share and less than 10% of the passenger market share, presents an opportunity for role-players, both public and private, to reposition themselves and the industry in a way that contributes to its expansion, says Public Enterprises Minister Pravin Gordhan.

In a keynote address during the Africa Rail Industry Association’s Future of Rail in Africa virtual event on March 31, he said it was clear that a “massive capital investment backlog” had to be tackled, as did the issues of inadequate funding, obsolete and aging infrastructure, deteriorating rolling stock and outdated technology.

In addition, he said there was also a lot of debate about limitations on the narrow gauge and whether an alternative was required, as well as insufficient skills in South Africa’s rail sector.

However, despite these challenges, he said there were opportunities for both the private and public sector to contribute to growing and improving the transport sector. Gordhan added that the Department of Trade, Industry and Competition’s Steel Master Plan could also be “massively impacted in a positive sense” if the rail sector were to take off.

As such, he pointed out that the government’s proposed policy interventions provided an opportunity not only for the growth of the freight transportation sector, but also for the growth, transformation and industrialisation of South Africa’s economy.

“The modal shift from road to rail remains a priority in this regard, but it is just one of many initiatives that all of us need to take, particularly Transnet at this point in time, together with the Passenger Rail Agency of South Africa, to improve their market share in both the freight and passenger sectors.”

In terms of private sector participation, Gordan said that, currently, only a few rail operators besides Transnet Freight Rail, had access to the rail system, but that a number of policy developments were under way which aimed to reform the rail sector, seemingly paving the way for increased private sector participation.

“We have to ensure that access to the rail network occurs in a fair and transparent way and improves the competitiveness of the system.”

In this regard, he said the Draft Rail Policy White Paper by the Department of Transport, and the Economic Regulation of Transport Bill of 2020, were important developments. “These have been further highlighted in the government’s Economic Reconstruction and Recovery Plan, which recognises the need for accelerated infrastructure investment and rail clearly is one of them.”

Further, Gordhan said Transnet would be responding to the Economic Regulation of Transport Bill, which sought to create a much-improved and integrated system of economic regulation of transport of passengers and goods through the various ports.

“The Bill proposes the establishment of appropriate institutional arrangements and procedures to support the consistent economic regulation of transport facilities and services. As the Department of Public Enterprises, our role is to ready the State-owned companies reporting to the department to align themselves to this new legislation.”

He added that the Bill had a particular impact on Transnet, including how the regulatory function would be administered in respect of both ports and rail.

“Significant changes are proposed for the rail sector which has never been economically regulated, except under the provisions of the Competition Act,” said Gordhan, adding that rail safety regulations were likely to go unchanged.

Nonetheless, one of the anticipated changes proposed in the new Bill was the provision for the broader third-party access to the rail network by other operators.

“This is a complex process but [it] presents an opportunity to start debating how we anticipate the Bill and what it means to open access to the rail infrastructure so that we start to find points of convergence among ourselves long before the Bill becomes a piece of accepted legislation.”