South Africa

Transnet welcomes private sector to South Africa’s ports and rails

Transnet said it welcomes government reforms to allow more private sector participation at South Africa’s ports and rails.

Transnet chairman Andile Sangqu recently gave an update on the utility’s operational and financial performance. This comes as the utility implements its Recovery Plan, which commenced in October 2023.

Sangqu said Transnet is implementing this Recovery Plan in the context of fundamental changes in the legislative and regulatory regime in which it operates, as necessitated by the National Rail Policy and the Freight Logistics Roadmap. 

“Transnet fully embraces this policy imperative, and the company is making solid progress in its implementation, in line with the expectations set out by the government,” he said.

“We support this process wholeheartedly because it opens numerous opportunities for Transnet by ensuring better use of the rail network.”

He said the utility anticipates that new users may introduce alternative technologies and innovations that will make the system more effective and improve service quality. 

“Access fees will be used to maintain the rail network to a standard required for safe and reliable operations,” he added.

“Transnet remains committed to meeting the deadlines set for this process, and we continue to engage with the government, including in areas where more time may be required to ensure that implementation does not have any unintended consequences.”

He said Transnet particularly appreciates the positive comments from some private sector rail operators, who see the long-term benefits that this move will have on their own business development and the economy as a whole.

“We therefore look forward to the public comments process to be undertaken by the Interim Rail Economic Regulatory Capacity, where we will have an opportunity to share our considered views.”

Transnet chairman Andile Sangqu

When Transnet launched the Recovery Plan in October 2023, it said it would accelerate private-sector participation and strategic transactions.

The infrastructure and design of the Durban Container Terminal (DCT2) have remained the same since 1963. 

DCT2 manages approximately 65% of container cargo in highly constrained conditions and operates at critical levels beyond the original design specifications. 

Over the past 20 years, congestion at the terminal due to shipping traffic and limited operational capacity has led to well-known and publicised backlogs at the Port of Durban.

“The efficiency of the South African port system affects the country’s trade with the rest of the world,” Sangqu said.

“Congestion, delay, and increased cost of moving goods into and out of the country has created serious challenges for the economy.”

Sangqu said international comparisons strongly suggest that South African ports fail to achieve competitive outcomes. 

He referred to the World Bank’s Container Port Performance Index 2020, which revealed that South Africa’s commercial ports cluster is at the bottom of the 351 ports.

Therefore, introducing a private sector partner at Pier 2 is a long-standing priority of the national government. 

“The recovery of the Port of Durban and the expansion and modernisation of the container capacity at Pier 2 is therefore an imperative of the government and also of Transnet,” he said.

There have recently been legal challenges surrounding the private partner chosen to manage the upgrade and development of Pier 2 at the Durban port, International Container Terminal Services (ICTSI).

However, Sangqu said selecting ICTSI was rigorous, competitive, and fair and complied with our governance standards. 

“Transnet will defend its procurement process and is currently waiting on the allocation of a hearing date,” he said.

“Let me take this opportunity to once again affirm that Transnet’s commitment to attract private sector participation across the business is going to continue as part of our corporate strategy and in accordance with government policy.”


Top JSE indices