Question NW3017 to the Minister of Public Enterprises
23 November 2023 - NW3017
Cachalia, Mr G K to ask the Minister of Public Enterprises
Whether, in light of the statement by the International Monetary Fund (IMF) at a recent Bloomberg event that private sector investment in the form of private-public partnerships is necessary for the Republic to break out of the negative trend in economic growth caused by poorly performing state-owned enterprises (SOEs) (details furnished), while the IMF research suggests that growth for 2023 is down to 0,3%, and that the Gross Domestic Product is down 3,2 points, which is directly attributable to loadshedding and rail transport problems, he intends to remain resolute in the face of opposition from all fronts and encourage public-private partnerships at all SOEs; if not, what is the position in this regard; if so, what are the relevant details?
Reply:
Both the government and Transnet are promoting private sector participation and the introduction of private capital in various projects.
According to the information received from Transnet
Regarding recent statements by the International Monetary Fund (IMF), Transnet acknowledges that it has encountered several challenges that have led to a decline in the operational efficacy of the railways and adversely impacted economic growth. The organisation is implementing targeted interventions aimed at resolving the challenges, and as part of this process, aims to improve collaboration with the private sector. Transnet believes that private sector partnerships (PSPs) are critical to our future and will provide the organisation with access to the additional skills, human resources, and capital required to reposition it. Furthermore, the active engagement and participation of various Transnet stakeholders across the work streams of the multi-stakeholder National Logistics Crisis Committee (NLCC), which includes the private sector and industry experts, exemplifies the nascent improvement in collaboration.
Going forward, Transnet' strategy (Reinvention for Growth) identifies private sector collaboration as one of its key levers for enhancing immediate performance and positioning the organisation for medium-term growth. As an essential component of the strategy, the private sector partners will play a crucial role in enhancing Transnet's capacity to execute quality services, develop and/or expand infrastructure, and unlock growth in industries such as mining, manufacturing and agriculture that contribute to job creation and GDP growth.
The rail reform process and the introduction of private train operating companies (TOC) on the freight network are essential components of the improved collaboration between Transnet and the private sector. This liberalisation process will enable the private sector to invest in rolling stock and establish freight railroads, which will have a significant impact on the market structure as TFR will no longer be the sole provider of freight rail services and will face competition from the private sector. In April 2024, the process of integrating private TOC will be formally initiated by inviting interested parties to acquire available slot capacity on the network. In addition, the reform will result in the establishment of a separate rail infrastructure manager, Transnet Rail Infrastructure Manager (TRIM), to oversee the network's management and ensure the equitable allocation of capacity to prospective TOCs. The establishment of TRIM is progressing well, and there is an expectation that the new OD will be established by the end of October 2023.
While most PSPs are long-term initiatives with benefits expected in the next 3 to 5 years, significant progress has been made in the development of these initiatives.
The recent announcement of a partnership between Transnet Port Terminals (TPT) and International Container Terminal Services (ICTSI) demonstrates the organisation's dedication to implementing this crucial lever. Several other initiatives are already in the partner selection process (request for qualification or request for proposal stages), and these include the Container Corridor Operating Lease; the Transnet Engineering Rolling Stock Leasing Company (TE Lease Co); the Ngqura Manganese Export Terminal (NMET) technical solution for the appointment of an EPC turnkey service provider; and Boegoebaai Port and Rail Development.
Remarks: Reply: Approved / Not Approved
Jacky Molisane P J Gordhan, MP
Acting Director-General Minister
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