6 days ago
Creecy's new Rail Bill promises reform measured in six key numbers
South Africa's logistics infrastructure is under construction and Transport Minister Barbara Creecy has laid out an overhaul plan with six hard numbers and a new Rail Bill.
In a rare moment of relatability from the GNU member with the most 'tannie energy', Barbara Creecy said that being transport minister is the worst and best job she's had. 'The best because there's so much to contribute, the worst because there are lots of things that are wrong, and fixing them is very complicated.'
'Complicated' is generous. The logistics bottlenecks in South Africa's rail infrastructure are bleeding billions per day from the economy.
But Creecy said her department is moving to tackle the mess with a soon-to-be tabled bill and what she describes as 'overwhelming appetite' from the private sector.
Six numbers to shape a sector
The minister's 'six numbers' sit at the centre of her department's overhaul masterplan:
Ambitious targets, however, don't build tracks. What's needed is a structure to support them.
Laying down the law
A first-of-its-kind Rail Bill is set to be introduced later this year, according to Creecy, in an effort to move rail reform into legislation.
'This bill aims to legislate reforms intended to transform the freight and passenger rail sectors,' the Department of Transport told Daily Maverick. 'The department believes that this Rail Bill will offer legal clarity regarding future policy directions.'
Creecy stressed that the underlying infrastructure will remain in state hands, managed by the Transnet Infrastructure Manager.
Private sector appetite
The Department of Transport issued a Request for Information (RFI) in March this year – 162 submissions were brought, along with 11,600 visits to the site, which signalled interest across major freight corridors, especially that of ports, Creecy said.
'It's going to mean that future proposals will be responsive,' she said. 'We have seen situations where proposals that have been put out by state-owned entities have not been appetising to the market.'
Some companies have already approached the department with funding offers for urgent fixes, Creecy detailed.
In the meantime, Transnet has launched funding requests with National Treasury's Budget Facility for Infrastructure for short-term, urgent repairs and long-term revitalisation.
How does this affect you?
If the transformation goes to plan:
Cheaper goods if logistics costs come down
Job creation through infrastructure development and manufacturing
Reliable exports and better trade performance
Less road congestion and more efficient freight
If not:
Lower tax revenue and reduced income for operational entities
Shrinking global logistics share could trigger job losses
Freight and port processing costs will continue to rise
Higher product prices will cut consumer spending and access
Can the state afford it?
According to Creecy, the state needs to be investing about R15-billion to R20-billion a year to have the network functioning effectively.
'It is plausible,' said transport economist Dr Johann van Rensburg, but only if this number also takes into account maintenance and future upgrades.
Council for Scientific and Industrial Research transport economist Shaun Mhlanga also believes this investment to be possible, pointing to hybrid models that blend government guarantees, private investment and multilateral funding.
Mhlanga added that the recent approval of a R51-billion government guarantee and the African Development Bank's R18.8-billion loan to Transnet, show that this is feasible.
Dr Alex Malapane, an independent economic analyst, says this estimate is 'fiscally unrealistic, yet politically seductive'.
With debt service costs exceeding R380-billion annually, Malapane argues that relying on the public purse alone would be irresponsible. 'True reform means handing over operational control. Anything less continues the cycle of underdelivery and overpromising.'
Weak bones, long returns
The transformation plan stems from an unavoidable reality: the network is ancient. 'Our existing network has not been developed since the 1970s, with the exception of the Gautrain,' Creecy said, adding that the country still uses narrow-gauge tracks and outdated control systems.
The return on this investment won't come quickly. Mhlanga estimates five to 15 years for most major upgrades to show results.
Malapane confirmed this, but said that it's not a cause for delaying action.
'Reducing turnaround times at Durban port or unblocking key freight corridors would improve export volumes in under 36 months. The idea that infrastructure only pays off in the long term ignores the multiplier effect that high-impact upgrades can have,' he said.
Van Rensburg said the payoff begins the moment new infrastructure opens. If the infrastructure is in better condition, maintenance costs drop, operational efficiency rises and user costs fall, but only if the benefits of the upgrades are not inflated, he said.
Transnet's reinvention by necessity
Transnet's debt structure is a major concern, according to Creecy, and is thus being restructured into a state-owned infrastructure provider.
Private operators will be able to run trains on key routes, pay access fees and offer niche services, such as agricultural and tourism lines.
Creecy acknowledges that although South Africa is about 20 years behind the curve, we can learn from the mistakes of other countries with more advanced systems.
