The State of South Africa’s Railways: A Call for Advocacy and Action
In his recent address as the African Rail Industry Association (ARIA) Chairperson, James Holley highlighted the critical state of South Africa’s railways. According to Holley, the two key metrics for measuring railway performance are the number of people travelling by train and the amount of freight moved by rail. Unfortunately, both of these metrics have been declining for several years, with passenger volumes estimated to be more than 80% lower than in the late 2000s, and freight movements showing a 29% decline in the past five years alone. This decline is concerning, and if not addressed, could have serious implications for the future of the country’s railway system and the economy as a whole.
The Path to Recovery
Despite the complex and well-documented problems facing South Africa’s railway sectors, Holley focused on the path to recovery. He outlined the outcomes of the ARIA board’s two strategy sessions, which focused on the Passenger Rail Sector and the Freight Rail Sector, respectively. The following sections detail some of the key policy proposals and interventions that ARIA has recommended.
Policy Alignment
The rail industry and the South African economy in general need to coalesce and support the government’s reform plans and agenda. According to Holley, South Africa has a Gazetted Rail Policy, but there is still debate about policy implementation. He argues that now is the time to implement the policy and no longer debate it, as this policy has the potential to ignite the South African economy.
PRASA Devolution
A primary reform for the passenger sector is the devolution of PRASA into the Metros. This would involve developing a Devolution Strategy for Commuter Rail, as proposed in the National Rail Policy (NRP). ARIA, through its MOU with the Department of Transport (DoT), stands ready to support both the DoT and PRASA in this effort. ARIA is encouraged by the appetite from metros such as Cape Town and Johannesburg for the implementation of this policy intervention.
Infrastructure Integrity
The critical maintenance backlog in South Africa’s rail infrastructure has been a long-standing problem. ARIA has started engaging with and contributing to the public participation process that the DoT has embarked on for the Private Sector Participation Framework. This framework will set the guidelines for unlocking private sector funding into track infrastructure. The PSP Framework will ensure that an independent PSP structure is created to manage the process and guide the collaboration between SOEs and the private sector.
Track Infrastructure Investment
ARIA estimates that more than R100 billion needs to be spent to restore track integrity. While there are three potential sources of this capital (Transnet, government, and the private sector), ARIA believes that Transnet’s ability to raise further capital will be constrained. National Treasury’s fiscal position also indicates that it does not intend to provide this level of grant funding to restore railway infrastructure. This leaves the private sector as the only remaining source of funding. The appetite to invest in track infrastructure is there because the underlying freight volumes are there. However, what is needed urgently is a framework to guide its implementation. The vertical separation of railways into the roles of Infrastructure Owner, Infrastructure Managers, and Train Operating Companies, together with the Private Sector Participation Framework, are critical for this success.
Third-Party Access
ARIA obtained two legal opinions from Weber Wentzel in 2022. The first confirms that there is nothing in regulation or law that prevents the immediate implementation of Third-Party Access (3PA). The second confirms that a Complaint against the act of preventing access to critical rail infrastructure would, depending on the specific nature of the complaint, most likely be upheld by the Competition Commission. The need to implement the critical reform of 3PA has never been more important for the rail industry and the economy. Read the full speech given by ARIA Chairman, James Holley < HERE>