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Private rail operators have welcomed President Cyril Ramaphosa’s announcement that third-party rail network access will commence in April this year.

Mesela Nhlapo, CEO of the African Rail Association (ARIA), called the announcement “historic”. “It’s a historical moment in the history of South African railways. In over 160 years, this is the opportune moment to work with Transnet Freight Rail (TFR) side by side to ensure that transport remains the backbone of the economy,” Nhlapo said.

Third-party rail access, which was first touted by President Ramaphosa in 2020 as part of his Economic Reconstruction and Recovery Plan, became a reality last night during his state of the nation address.

“Transnet will start the process of providing third-party access to its freight rail network from April 2022 by making slots available on the container corridor between Durban and City Deep in Gauteng,” Ramaphosa said.

Nhlapo said government’s proposed structural reforms to the rail sector, which will see private rail operators operating on the country’s core rail network, will breathe new life into an industry which is currently under severe pressure.

“The private sector wants to invest in new train sets, and we are ready to work with government on this. It is up to the Government to follow through on their 2020 commitment.”

Nhlapo says the opening up of SA’s rail network to private, fee-paying operators, will also create cost-effective gateways into Africa for South African goods through the African Continental Free Trade Agreement (AfCFTA). Just as trade across Europe has thrived through the European Union, Africa is expected to benefit similarly, but that will not happen without efficient and interoperated rail systems.

This was underscored by Ramaphosa when he said South African companies are poised to play a key role in taking up the opportunities for preferential access to other African markets. “The Free Trade agreement is about Africa taking charge of its destiny and growing its economies faster,” he said.

Nhlapo says multiple operators will generate additional revenues for Transnet that will be invested back into catch-up maintenance so that South Africa’s rail network can return to the source of global competitive advantage that it should be.

“The value of this move to the state and Transnet would be significant. Right now, we have a massive network with excess capacity which could unlock significant incremental cash flows through access fees from private operators. In addition, the existing infrastructure requires no extra state investment, as the capacity is already there,” she says.

In addition, our local supply base within the manufacturing environment will see a rapid turnaround as demand starts to increase for rolling stock.

Early projections by ARIA suggest that additional parties using the rail network will create numerous upstream jobs by enabling industry to become internationally competitive. Similarly, rail corridors into Africa would create cost-effective gateways to take South African goods into these markets through the African Continental Free Trade Agreement (AfCFTA).

Issued by the African Rail Association