National Rail Policy White Paper: briefing

Meeting report

National Rail Policy White Paper: briefing by Department of Transport
DoT Acting Director General Mr Ngwako Makaepea, presented the White Paper on the National Rail Policy as recently approved by Cabinet to the Committee.

The briefing included the policy process that was undertaken, the policy vision and mission, policy statement and implementation priorities.

The Department started in 2014/15 with analysis and research, the drafting of a discussion paper and green paper and eight years later the final white paper was approved by Cabinet.

The vision and mission of this policy is to work towards and integrated freight and passenger mobility system that would strengthen economic growth and social development by repositioning it as the backbone of South Africa’s land transport.

The policy thrust is to revitalise the country’s railway sector where rail offers the most economically, environmentally, financially and socially viable logistics and or mobility solution.

The policy seeks to allow third party access and introduce competition for services rendered by PRASA.

It is envisaged that DoT shall establish a Government Component to be known as the Rail Planning Component to undertake centralised strategic rail network planning. The central Rail Planning Component shall ensure the National Rail Master Plan balances a brownfield approach that minimizes costs by retaining as much as economically possible of the existing infrastructure against a brownfields approach meant to extend the standard gauge network at every economically justifiable opportunity. This will include the coordination of a rail sector development programme with local and international role players.

Mr Makaepea said that the central Planning Component shall include branch lines in the National Rail Masterplan. The central Planning Component will determine whether a branch line is strategic or non-strategic, the involvement of the private sector, if rehabilitation is required and if other entities i.e. municipalities will be responsible for the line.

The DoT and the Department of Trade, Industry and Competition (DTIC) will set up a joint committee to develop the strategy to ensure local industries are capacitated and job creation is prioritised, whilst ensuring compliance with the AU resolution of 2007 on standard gauge.

Mr Makaepea noted that the economic regulation of Infrastructure Managers as an intervention will play a vital role in providing regulatory certainty to multiple rail sector actors. The Railway Safety Regulator (RSR) shall develop a railway risk matrix to achieve an inherently safe railway. The DoT will also develop and maintain a central security risk register to help ensure sectoral resilience and threat awareness as well as a security coordination forum where SOEs, the country’s security agencies and different levels of government can share information.

The market structure will be split between three distinct functions: Infrastructure Owners, Infrastructure Managers and Train Operators. These functions could be provided by any combination of vertically integrated entities on condition of clear accounting separation.

Every open line shall be subject to third party access managed by an Infrastructure Manager (IM) appointed by the Infrastructure Owner of that open line. A transparent interim arrangement for access must be provided by the incumbent IMs for all classes of freight network until such time that the Transport Economic Regulator (TER) is fully operational, whereafter IMs will sell train slots at TER approved prices. IMs must publish a network statement that details access conditions, capacity allocation, services and charges. Regulations, guidelines and fora to ensure safety, cooperation and mutual understanding on matters will be developed.

Government will limit its funding contribution to rail infrastructure only and leave train operators to fund their own rolling stock. DoT will spearhead the development of a private sector participation (PSP) framework whilst pursuing policies that will create a conducive environment.

Where the current urban rail network does not yet reach and the need for rail services occurs, the municipalities should consider the development of other light rail systems such as street cars. Provincial Governments should develop business cases for further deployment of regional rapid transit, to integrate urban guided transit. DoT shall assess the ongoing value proposition and the competitiveness of the current long-distance services and examine the business case for further investments in long-distance services.

The respective spheres of government may apply their own funds to rail investments to the extent of their ability, the responsible authority may engage other interested entities or the private sector to co-fund services.

DoT will develop a devolution strategy in alignment with the Integrated Urban Development Framework. Thereafter it will capacitate municipalities as necessary and devolve operational subsidies for urban commuter rail to all of them to be managed as part of their Comprehensive Integrated Transport Plan.

Passenger rail may be prioritised and rail tourism will be promoted to diversify the country’s tourism offering.

The Committee was informed of the following implementation priorities:

Short term (by 2024):
• National Rail Policy approved;
• National Rail Bill enacted;
• Accounting separation of Transnet Freight Rail’s Infrastructure Manager and Train Operator completed;
• Third party access commences;
• SOEs publish their baseline Network Statements;
• National Rail Master Plan completed;
• Devolution of Commuter Rail Strategy completed.

Medium term (by 2030):
• Local authorities complete planning for additional urban guided transit corridors;
• Commencement of the National Rail Master Plan implementation on priority corridors;
• Conclude the business case for the first Standard Gauge Pilot Project (selected from freight, higher-speed or high-speed passenger options)

Long term (by 2050):
• Conclude implementation of approved priority corridor projects for freight and passenger rail;
• The rail mode achieving its rightful position in an integrated national transport system; and
• Rail achieved movement of rail friendly cargo and passengers from road-to-rail.
(see document)

Discussion
Mr T Brauteseth (DA, KZN) asked seeing that there might be a skills shortage across the industry such as rail engineers, what is DoT’s plan to attract skills from abroad and how will this be deregulated. He asked what level of interaction will there be between government and the private sector without getting in the way of the private sector, and have these conversations commenced. Lastly, will the local authorities be funded, as currently most local government will not be able to afford additional responsibilities? The ownership of land and responsibilities of corridors will also have to be made very clear.

Ms S Boshoff (DA, Mpumalanga) asked if a maintenance plan was factored in and if an estimate for return on investment has been established for the private sector investments.

Mr M Rayi (ANC, Eastern Cape) asked the Department to give the assurance that the public sector would not be disintegrated as this will have a negative effect on prices and cost effectiveness for commuters. He reiterated the previous question on the affordability to local governments and wanted to know if all lines will fall under the DoT?

Ms M Moshodi (ANC, Free State) also asked if maintenance was factored into their planning. She asked when competition for PRASA will be introduced? Lastly, she asked Mr Makaepea when he started as Acting DG and when the post will be filled?

The Chairperson asked the Department to ensure that the Committee is well informed throughout the process. He raised a concern that no mention is made of interaction with sister departments like the Department of Public Enterprises.

Departmental responses
Mr Makaepea replied that there is collaboration with European countries to source scarce skills. There will also be a joint effort between DoT and Higher Education institutions on this.

He informed the Committee that various engagements with the private sector have already taken place. Stakeholders from the rail, timber and agriculture industries as well as banks have been part of engagements. Pledges were made by big and small operators and engagements with different stakeholders are continuing.

Mr Makaepea agreed that the situation with municipalities is very challenging. The funding for this is not clear in the draft policy, however the principle stands that if you own it you need to fund it. He indicated that although the policy does not pronounce on Transnet versus DoT, it is envisaged that they will work together. This is also applicable to the Department of Public Enterprises and other departments and SOEs.

He replied that maintenance was not included in budgeting as it will form part of the operational budget and planning programme.

It is envisaged that the national rail plan must make investment favourable for the private sector whilst ensuring that the public sector plays a role. It will increase jobs as more investment is brought in and planned.

Mr Makaepea explained that he has been in the Department of Transport for the past 17 years and is the current Deputy Director General for Rail Transport. He has been the Acting DG since June 2022 and the position has been advertised.

He concluded by indicating that the rail policy should become the pillar to ensure that the different transport modes need work together.

Ms Mala Somaru, Acting DDG Rail Transport, replied that the Economic Regulations will seek that independent and fair access to the rail network is ensured, it should be non-discriminatory and fair. For the private sector it should be fair and cost effective and this should be benchmarked against international costs. The Transport Regulator will also look at complaints and during the build-up they will look at a framework whilst considering the capacity of the network and the condition of the network.

Ms Somaru replied that a Memorandum of Understanding between the Department of Public Enterprises and Department of Transport was signed and a process of engagement is in place.

Committee Programme
The Committee Secretary informed the Committee that three bills had been referred to the Committee for consideration: Expropriation Bill as well as the Economic Regulation of Transport Bill and the National Road Traffic Amendment Bill which are all Section 76 bills.

Due to the technical nature of the bills, it had been requested that the bills must be workshopped before consideration. A draft programme was presented with the workshop for Members and discussions on the bills scheduled for February 2023 and final mandates scheduled for May 2023. As soon as the Programming Committee has finalised the 2023 programme more specific dates will be presented to the Committee.

The minutes of the meetings of 30 August and 20 September 2022 was adopted.

The meeting adjourned at 11.59pm.