South Africa’s numerous rail upgrade plans are not guided by a coherent, high-level, overarching strategy, the lack of which may lead to poor implementation, advises engineering and professional services consulting firm WSP Group Africa regional director Vishaal Lutchman.

He explains that, where there is misalignment between a strategy and a plan, or no strategy at all, a project tends to lack strong execution because approvals of the plan lie in the strategic domain, which serves to highlight which objectives need to be prioritised when embarking on a project. This means that many crucial questions in terms of implementation could go unanswered.

Lutchman, therefore, believes that South Africa’s rail plans should be a reflection of a strategy that clearly justifies and defines end goals.

“Are we prioritising the shareholder value, perhaps ahead of foreign ownership, or are we prioritising the coming together of first- and second-domestic economies through gross domestic product growth? The strategy needs to map out how we intend to use the resources we have for the benefit of this country.”

Lutchman asserts that a clear vision will unify the motivations of different sectors and perhaps prompt government to rethink some of the plans mapped out in the National Development Plan.

For example, he cites the existing energy corridor passing from Richards Bay, in KwaZulu-Natal, into Mpumalanga, which has been primarily designed to transport coal, as reflective of an energy strategy that is not abundantly clear and is, perhaps, contradictory.

Lutchman notes that, while rail is crucial for coal logistics, as without rail the power stations would not receive the coal volumes necessary for power supply, the energy corridor is geared towards supplying coal to the domestic market as well as 62-million tons a year for export.

He notes that, while rail is extremely important for economic growth, establishment costs could be prohibitive and, as export is planned, it could prove detrimental to the domestic economy from an energy security perspective.

Lutchman argues that providing an artery that ships energy out of the country during an energy crisis is questionable and may not be the best decision amid South Africa’s current insufficient generating capacity.

He believes this is a case in point of a lack of clear strategy, which has encumbered the sufficient development of energy infrastructure and, therefore, perhaps stifled the production capacity of energy.

Lutchman notes that macro plans, dealing with freight issues, were historically made and executed to suit “bigger players”, like major asset owners, operators and mining houses. Therefore, they tend to favour the upper economic tier. For many years, the decisions that State-owned rail utility Transnet made in terms of capacity planning leaned in favour of the bigger companies. For example, Transnet is contracted to provide downstream freight logistics solutions to several mining houses, which comprise some of Transnet’s biggest clients and are the utility’s biggest sources of revenue.

This has, until now, led Transnet not to prioritise its developmental mandate, which requires it to favour smaller clientele as well – a mandate clearly at odds with Transnet’s tendency to favour its primary clientele, he states.

Transnet’s current big-business-orientated mandate discourages it from agreeing to plan and supply rail capacity for smaller mining operations. This means that a robust, realistic and perhaps State-led developmental strategy is needed, with a revised focus on Transnet’s mandate.

Lutchman argues that, moving forward, Transnet could change the way it prioritises smaller businesses to counteract its past behaviour in the interest of its developmental mandate.

Moreover, he maintains that, while South Africa has some of the best developmental policies in the world, it does not exploit these policies as aggressively as it should. The Mining Charter, for example, seeks to encourage new market entries, but is neutered by fixed, regimented and historic pit-to-port transport lines, he argues.

Lutchman suggests that the structure of existing supply chains inherently facilitate the already established mining houses and discourages new entries into the mining market.

Lutchman also points out that many dry bulk port facilities service existing mining giants, which makes it impossible for smaller companies to export.

He suggests that active government backing, as well as innovation, is needed to facilitate collaboration between new mining entrants that operate in a similar area. Aggregation of smaller volumes from a number of mining houses would increase the viability of transporting cumulative dry bulk by rail, as well as stimulate the local market.

Not only would this type of collaboration provide smaller companies with a better transport logistics solution, it would also provide them with bargaining power and the opportunity to obtain development funding.

Lutchman even suggests that, in some cases, there is an opportunity to beneficiate at the source, which would lessen the demand on railway lines.

In light of these criticisms, he says there is always an opportunity for Transnet to be proactive in terms of training and development, particularly with regard to facilitating the needs of smaller miners.

WSP technical director Gavin Higgs says, in his experience, there does not seem to be a drive to move quickly to implement rail plans to increase South Africa’s competitiveness.

He believes that South Africa has a skills shortage in terms of rail and, therefore, in the near future, skills provision may be sourced from outside the country.

Higgs believes, however, that it is possible to restore the skills levels through various education and training programmes.

Lutchman reiterates that, for any of these prospects to come to fruition, government needs to adopt a strategy realistically prioritising economic growth that drives the implementation of these various projects. Looking forward, he believes that the planned investment in capacity provides the opportunity to fundamentally change the existing status quo to be inclusive.