Question NW2105 to the Minister of Public Enterprises
04 October 2023 - NW2105
Malinga, Ms VT to ask the Minister of Public Enterprises
Noting that Transnet plans to shift the operations of the container corridor between Johannesburg and Durban, which plays a major role in industrialisation, economic growth and social development from state-ownership to private-ownership for the next 20 years, (a) how will the 670 km long electrified rail in the specified container corridor incentivise private investment, given that the Republic is experiencing energy insecurity which may adversely affect the turnaround of operations and (b) does Transnet have regulatory capability to ensure that private-ownership does not make things worse by replacing inefficient and restrained state monopoly, with inefficient and unrestrained private monopoly?
Reply:
According to the information received from TRANSNET
Background:
Transnet prefers retaining the container corridor and to sell slots to third party operators whilst operating some slots but in the absence of immediate financial support for the maintenance of the infrastructure, both the current and the backlog, entering into a 20-year operating lease with a private company is the best option available to keep this important corridor open. Transnet approached the market for a partner to enter into an operating lease for 20 years in order to invest in and grow freight on the corridor that is the backbone of the country’s manufacturing sector. Careful consideration was given to the profile of the potential private partner for the planned Container Corridor Operating Lease. The ideal partner must have an established presence in the supply chain; the ability to leverage Transnet and other rail terminals in rail-based logistics solutions; have access to inexpensive capital and the ability to introduce more efficient procurement.
The Container Corridor is 100% electrified. The challenges with the electrified sections of the rail network are two-fold, namely energy insecurity and the increasing (high) levels of copper cable theft. Transnet has invested and will continue to invest in back-up power generation in areas of its business most affected, within its financial means.
As indicated during the SONA 2023 address, Transnet must implement the following actions to comply with the approved National Rail Policy:
Introduction of an Infrastructure Manager, independent of the Train Operating Companies by October 2023 is a prerequisite to allow network access for private train operating companies by April 2024, and
Set up the necessary structures and processes to comply with impending regulation of the Infrastructure Management function as set out in the Economic Regulation of Transport Bill.
In accordance with the terms of the Operating Lease agreement that Transnet will enter into with the private sector partner, it will allow Transnet to ensure operating and efficiency standards are maintained with requisite penalties for non-performance. The Infrastructure Manager will be responsible for ensuring compliance with the conditions of the lease.
Notwithstanding the above, the Board of Transnet will review the appropriate responses to the challenges of the container corridor.
Remarks: Reply: Approved / Not Approved
Jacky Molisane P J Gordhan, MP
Acting Director-General Minister of Public Enterprises
Date: Date: