Opening South Africa’s core railway network to private operators will stimulate economic growth in the country, Traxtion CEO James Holley tells Engineering News Online.
He says the company fully supports government’s proposal, as outlined in a National Treasury economic growth discussion document and the draft White Paper on National Rail Policy, to introduce private operators into South Africa’s mainline rail network through changing the current regulatory framework.
Both documents call for private operators to access the core railway network in the country. The draft White Paper proposes the establishment of a new State-owned enterprise to own the rail track infrastructure, and then various operators will operate on top of this infrastructure.
Transnet will be the largest operator, with other companies operating alongside it.
Holley says this aligns to international best practice and, while it is “the correct path”, it is “inherently complicated”, as the separation of infrastructure out of Transnet will be complicated and will take time to implement.
Nevertheless, Traxtion believes the proposal is fully achievable and says that, if it becomes a reality, the company will respond with “significant investment” into the sector.
Holley indicates that the primary benefit of implementing the proposal would be to ensure infrastructure is used for economic growth.
“Growing a nation’s infrastructure base is hugely growth positive,” he notes.
The country already has a massive installed rail base, with 36 000 km of installed rail track, and Transnet alone having 23 000 km of route.
While Holley lauds the considerable work Transnet has already done on the rail network, especially in terms of safety, there is latent capacity in this network, which creates opportunity to bring in additional operators.
Private sector operators are likely to invest billions of rands in train sets that will complement Transnet’s fleet; will provide it with new revenue from additional access fees; and will attract new volumes to rail, rather than taking any volumes away from Transnet.
Moreover, the country has a number of rail-centric bulk commodities that are being transported on road rather than by rail. These could be moved back onto rail if the rail network is opened up to private operators.
Holley notes that industry seems largely supportive of the proposal.
Concerns have, however, been raised regarding privatisation, but Holley assuaged these, stating that no element of Transnet will be privatised and that the entity will continue in its current form, while benefitting considerably from a new revenue stream – access fees.
“We will be using South Africa’s infrastructure to the best of its ability and complementing what Transnet is already doing on rail.”
He further assures the country that the proposal will not lead to job losses, but will instead create more jobs in the manufacture of locomotives.
Holley indicates that executing this concept will require a collaborative effort, with many private companies needing to participate for it to work, in line with international practices.
He adds that companies must have the financial capacity to ensure meaningful contribution, while operators must be competent and safe, to ensure that the integrity of the national railway network remains intact.