Question NW742 to the Minister of Transport

Reply:

(a) On 23 March 2022, Cabinet approved this White Paper on National Rail Policy, which takes a holistic view of the trajectory of the development of our rail system. This Policy not only creates policy certainty but also introduces radical structural reforms in the sector. This is intended to open up space for private sector investment and effective economic regulation that enables equitable access to both the primary and secondary network. The National Rail Policy intends to place rail on a sound footing to play a meaningful role as a backbone of a seamlessly integrated transport value chain able to make a meaningful contribution to the economy.

In March 2023 President Cyril Ramaphosa directed Transnet to implement reforms swiftly and completely to turn around the crisis in South Africa’s logistics system. This followed the President’s announcement in the 2023 State of the Nation Address that Government would develop a Freight Logistics Roadmap that would translate policy commitments into reality, including the restructuring of Transnet Freight Rail to create a separate infrastructure manager and the implementation of an open access regime for the freight rail network.

The Department of Transport was one of the lead Departments in spearheading the development of the Freight Logistics Roadmap (Roadmap) which was approved by Cabinet in December 2023. The Roadmap outlines a range of actions required to restore the efficiency and competitiveness of key industry supply chains, as well as ports and rail more generally. It is also a fundamental guiding document for Transnet, which articulates both the challenges to be solved in the freight logistics system and the role and positioning of Transnet within this system as it goes through various stages of reform. The size and complexity of the freight logistics system means that the causes of poor performance are varied and intersecting. The aim of this roadmap is therefore to set out an evidence-based, implementable and achievable path for reform of South Africa’s logistics system in a manner that effectively addresses these challenges, and thus enables economic growth and transformation.

The implementation of the Roadmap will be overseen by the Department of Transport, Department of Public Enterprises, National Treasury and the Presidency through the National Logistics Crisis Committee (NLCC) to enable a coherent, integrated response to the challenges within the national logistics system.

The Roadmap aims to:

• Set out structural reform within the rail and port sector. This will be done by creating a level playing field in ports and rail. A critical starting point for reform of the rail system, a separate Infrastructure Manager will be established for the rail network.
• To ensure a level competitive playing field in ports and rail, an independent Transport Economic Regulator (TER) will be established. The TER will be empowered by the Economic Regulation of Transport Bill. This legislation is an important enabler for private sector participation and third-party access in the rail sector.
• Right-size the rail network through developing a National Rail Master Plan. identifying the appropriate size of the network.
• Ensure the financial sustainability of the freight logistics system through private sector participation to systematically implemented through developing a Private Sector Participation (PSP) Framework for the rail sector to identify further PSP opportunities. The PSP Framework has been approved by Cabinet in December 2023 and its implementation plan is being developed. The PSP Framework for rail covers broad railway PSP issues, ranging from the South African PSP context, different forms of participation, a clear procurement framework and the role of rail economic regulation, as well as detail on the number of opportunities and the areas of PSP in the rail industry. The pursuit of PSP should, however, not be construed as the privatisation of the South African railways.

(b) In addition to the reforms such as the establishment of the TER, development of the National Rail Masterplan and the development of the PSP Framework, the Department of Transport has also developed an integrated Freight Road to Rail Migration Plan (FRRMP), the purpose of which is to ensure the effective and seamless road/rail modal shift, in an attempt to ensure a good equitable land surface transport split. The FRRMP has been extensively consulted on to ensure both government and private sector by-in and participation in this landmark road to rail split. The Interdepartmental Steering Committee, approved the Draft FRRMP which has since been workshopped with all relevant industry stakeholder, at the well attended FRRMP Colloquium moderated by the GCIS. It must be noted that the FRRMP follows the strategic interventions laid out in the Freight Roadmap, the Freight Road Strategy, the Rail Policy, NDP, Transport Master Plan and Transnet Recovery Plan.

The FRRMP aims to:

• Bring about equitable land surface transport modal split;
• Effective migration of rail friendly cargo back to rail ( road to rail migration)
• Effective infrastructure investment to ensure rail capacity.