Mixed responses to privatisation of rail in South Africa
Greater private involvement in the operation of South Africa’s rail infrastructure has been positively received. However, Andrew Pike of Bowman’s Ports, Transports, and Logistics said a private takeover of rail infrastructure is “not necessarily going to get a better result”.
In the last two State of the Nation Addresses (SONAs), President Cyril Ramaphosa said, “Transnet will start the process of providing third-party access to its freight rail network”.
This process has seen progress with Transnet’s call for private operators to run the Durban to Johannesburg rail corridor for 20 years and the Kroonstad to East London pilot project to test private use of a Transnet rail corridor.
At SONA 2023, Ramaphosa announced the creation of a separate infrastructure manager for the rail network by October 2023. This manager is expected to facilitate private access, maintenance, and development of Transnet’s rail network.
These announcements and progress have been positively received in some corners of South Africa.
Cas Coovadia of Business Unity South Africa (BUSA) welcomed these announcements of increased private involvement in South Africa’s rail network.
He even lamented the fact that the president did not go further by encouraging private access to more rail corridors.
The South African Association of Freight Forwarders also welcomed the news and urged “the public and private sectors to collectively deliver a solution with the utmost urgency”.
However, Pike has cautioned against the widespread optimism relating to the private operation of rail corridors in South Africa.
“You are exchanging a Transnet monopoly on a rail line for a private monopoly effectively. Without proper regulation, you are not necessarily going to get a better result,” said Pike.
He added that the leasing of the Durban-Johannesburg corridor does not align with the National Freight Policy outlined last year, which leads to policy confusion and uncertainty.
There are other questions Pike has about the privatization of Transnet: “Is it an equity partnership? Is it merely third-party access? Or is it complete privatization?”.
Pike expects substantial pushback from unions.
Cobus van Vuuren, the general secretary of the United National Transport Union (UNTU), said that the union is opposed to the ongoing privatization.
“We will fight to ensure that all members’ jobs are retained. Furthermore, we want to see job creation come out of this,” said Van Vuuren.
Despite Pike’s concerns with the increased private operation of Transnet’s rail corridors, he sees no alternative to privatization, as the Treasury is unwilling to substantially support Transnet’s balance sheet.
They will have to look at private alternatives, he said.