Stability and cohesion a way forward for African rail sector

29th July 2016 By: Simon Sonnekus - writer

Stability and cohesion a way forward for African rail sector

DELAYS Negative sentiments by the industry on implementing the designation policy and delays of some rail projects have led to discussions with Trade and Industry Minister Dr Rob Davies
Photo by: Duane Daws

Companies are under pressure from government and the public to embark on new projects while there are still projects that need to be completed. The countless delays across the rail expansions are worrying, says the RailRoad Association of South Africa (RRA).

Negative sentiments by the industry on implementing the designation policy and delays of some rail projects have led to discussions with Trade and Industry Minister Dr Rob Davies, where industry raised the possibility of establishing a secretariat, which includes private-sector role-players as well as governmental organisations, to scrutinise and assist with developments.

“The secretariat will remain responsible for factors such as the designation policy. Further, the body will look at enhancing the rail industry’s industrial development. Where necessary, the association is keen to extend support in the operations of State-owned enterprises to fast-track current projects. The more delayed the rail plans become, the harder it impacts on the industry and stunts economic growth,” says RRA CEO Bongani Mankewu.

He adds that, with projects such as the multibillion-rand Passenger Rail Agency of South Africa (PRASA) investment in the rolling stock fleet renewal programme, the South African rail industry should be ready to enter the export market. He notes that the secretariat should make use of the enhanced deployed policy instrument to take the industry forward, while also focusing on industry development.

The PRASA fleet renewal programme is the catalyst for the transformation of Metrorail services and public transport as a whole and has been designed to achieve a number of key government objectives, such as the delivery of high-quality service to citizens and the revitalisation of South Africa’s rail engineering industry by ensuring local manufacturing and local content.

PRASA’s effort to procure about 7 224 new rolling stock is well under way. The company has noted that, over the next 20 years, it will spend R123.5-billion on the delivery of new trains. The feasibility study, which was conducted in 2011, concluded that the rolling stock fleet renewal programme would deliver 5 256 coaches to satisfy existing rail passenger demand on the current network until the year 2020, 456 vehicles to satisfy growth in rail passenger demand to the year 2030 on the existing network and a possible further 1 512 vehicles to satisfy long-term rolling stock needs on new corridors to be constructed as part of future expansion of the existing network.

The procurement of new rolling stock is a critical component of PRASA’s mandate to provide for modernisation and growth. PRASA has since appointed Gibela Rail Transport Consortium to supply 3 600 new Metrorail coaches at a costof R51-billion over a ten-year period.

“Industry development remains cardinal to ensuring our position as the hub of the African continent. As the rail industry, we need to focus on running factories effectively, improving the quality of products produced, while also complying with required standards. We also have to modernise our technology and reskill our workforce, which must take place simultaneously and this is the right time to do all those things,” Mankewu avers.

Further, he reiterates that, in the current investment climate, it is important for operators such as PRASA and Transnet to use government’s deployed policy instruments, noting that the secretariat, along with the Department of Trade and Industry, the South African Bureau of Standards and the RRA will investigate how to modernise the industry.

He adds that the management of the four major State-owned enterprises indirectly and directly involved in the rail industry – PRASA, Transnet, Eskom and Denel – essentially influence the stability of the local rail sector, noting that turbulent management could be problematic.

“The public and investors [could] feel slightly uncomfortable [about] the governance of some of these enterprises, which have a direct effect on the industry. Should government, along with the two rail operators, ensure stability, especially in eliminating unnecessary delays and effective implementation of the deployed policy instruments, South Africa can fulfil the continent’s mandate.”

Mankewu also avers that, while rail manufacturers continue to focus on modernising skills and infrastructure, they should not lose focus of the main goal, which is integration into Africa.
He adds that, as most of the components need to be manufactured locally, the secretariat will focus on industrial development while using the designation policy and other policy instruments relevant to the sector to revive the rail industry so that products and services are ready for export to African countries.

“ . . . Africa’s industrial technology must be modernised . . . so that it can compete on the global stage. To build an industrial base for the continent, we need technological partners, as South Africa has capacity to maintain existing rail infrastructure, but will struggle with newer projects.”

Mankewu says African countries need to find innovative ways to control the value chain by being involved in the engineering and design phase of all projects and using regulation to ensure integration and infrastructure expansions.

“Supply chain industrialisation and growth must be the areas of focus; policies must maximise local value-add and spillovers from foreign direct investment, as well as tackle the fickleness of original-equipment manufacturers. The nexus between global industrial networks and African economic growth must not be lost as a result of the inability to control the supply chain of these rail investments,” he concludes.