Public-private partnerships (PPPs) create a platform for numerous opportunities for the South African rail sector, an industry which is currently in dire straits, says Traxtion CEO James Holley.
While the local rail industry is under pressure, Holley is hopeful that the Draft White Paper into the National Rail Policy, as well as the implementation of a Rail Economic Regulator and the South African Economic Reconstruction and Recovery Plan will provide a proverbial light at the end of the tunnel.
South African rail has, in recent years, been negatively impacted on by vandalism, which has paralysed the available fleets, as well as widespread liquidations, retrenchments and corruption.
State-owned Passenger Rail Agency for South Africa, for example, has recorded a decrease in passenger journeys to 208-million in 2018/19, compared with 645-million in 2008/9.
In spite of this, South Africa’s massive 36 000 km installed track network still stands to benefit from excess capacity, as Transnet is responsible for transporting only 17% of South Africa’s general freight.
Holley says government can use the excess capacity to its benefit by implementing toll or access fees for private rail operators using the under-used parts of the network.
“International precedent shows these are significant incremental cash flows,” Holley comments, noting that track maintenance costs should be largely fixed costs.
In addition, he notes that regional trading partners have moved to this model supporting interoperability and regional trade for pan-African operations.
Key sectors, such as agriculture, minerals, cars and containers, liquid bulk and even hazardous chemicals, stand to benefit if this model is adopted in South Africa.
While the viability is likely still open to question, Holley says no new regulation will be required to implement the model, with access agreements playing a large part in its success.
The Rail Economic Regulator will also be “of great support”, he notes, especially considering that high volumes and long distances will be key for rail to succeed in South Africa.