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Banele Gininza|Published 5 months ago
Transport Minister Barbara Creasy has revealed that Transnet has approached the Treasury for significant short-term infrastructure development funding.It aims to address deep-rooted challenges within South Africa’s rail system.
The appeal for funds for July and October was aimed at boosting tonnage transport and boosting profits for struggling railroads.
Appearing in a PSG Wealth Think Big interview on Tuesday, Creasey highlighted these urgent fiscal imperatives amid growing concerns expressed by Moody’s ratings agency last month.
The agency cited Transnet’s unsustainable capital structure, deteriorating liquidity position, uncertainty about future government support, and slower-than-expected operational improvements.
Mr Creasy said concerns would continue without new investment in rail infrastructure.Transnet has therefore made a request “to the Infrastructure Budget Facility for both the July and October periods”.
A number of figures were being thrown around, including a total investment of R200 billion, but Mr Creasy did not say exactly how much Transnet was asking for, but said it was a “substantial sum” given that South Africa’s rail infrastructure had taken 20 years to catch up with developed economies.
“If we want to make sure the network works effectively and increase the number of train slots, I think in the short term we will be investing about R15 billion to R20 billion a year into the network,” she said.
”The budget for infrastructure improvements is nearing, as existing lines need to be renovated to run more trains. And run faster. ”
said creepy In addition to seeking immediate financial relief, the Department for Transport was seeking a cooperative legal framework with the National Treasury to enable private investment in rail infrastructure.
He noted that multiple industry players have already expressed enthusiasm for funding specific improvements and a willingness to involve the private sector in rebuilding efforts.
“What we are working with National Treasury on is the legal means to enable such a development,” she said.
“These are all short-term ways we are trying to increase tonnage. Transnet is currently aiming to transport 180 million tonnes this financial year and I don’t think that will happen, but it is good to have ambitious targets to get the system going.”
Mr Creasy also revealed that the next rail master plan, due to be released for public consultation later this year, will highlight that, with the exception of the Gautrain, South Africa’s rail network has not undergone any major upgrades since the 1970s.
South Africa’s rail system, which currently operates on Cape Gauge, which is narrower than the standard gauge used worldwide, has limitations in terms of speed and efficiency. This prevents double-decker installation of containers within the same train, a key component for maximizing production.
“We need to think about how to reach the target of 250 million tonnes per year. There is already a demand for 300 million tonnes. So the question is whether railways will return to the backbone[of the economy]. What is the long-term vision for modernized railway systems, the development of railway infrastructure, control networks and basic control systems?”
Ultimately, Mr Creasy pointed out that any third party participation in the rail network would be subject to the assumption that the infrastructure would remain state-owned, and that Transnet was envisioned as a long-term infrastructure provider from which other operators could generate revenue in parallel.
However, understanding this transition will take time. According to research conducted, such an initiative could take up to two years to be financially completed if the government seeks proposals by the end of the year. This timeliness highlights the urgent nature of interim funding requests for the budget system and emphasizes a dynamic yet achievable reform approach.
“We understand that allowing third parties into infrastructure takes time. We have done a lot of research on this, based on case scenarios. If we put out a call for proposals at the end of the year, it will take two years to reach closure. That’s why the interim request for an infrastructure budget is so important,” she said.
“We understand what the long-term vision and plan is. We believe that we can form some form of partnership to fix the infrastructure. That could be concessions, BRT, B-BBEE, and that’s some of the information we gathered in the request for information process. This is a long-term vision for rail reform that aims to re-establish rail as the backbone of transporting people and goods.”
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