The South African government announced on Friday, 22 August, that it will allow private companies to operate freight trains on the national railway network. The measure aims to increase system efficiency at a time when the state-owned company Transnet struggles to meet demand, according to Reuters.
Transnet, responsible for South Africa’s railway and port services, has faced equipment shortages and maintenance delays. The situation is worsened by widespread cable theft and vandalism, factors that led the government to turn to the private sector to boost capacity and reduce losses.
According to Transport Minister Barbara Creecy, 11 of the 25 companies that applied for access to the network met the requirements and will proceed to the negotiation and contracting phase. Without revealing all the names, the minister confirmed that logistics company Grindrod has already been authorized to operate on the Transnet network.
“The companies we are contracting will not take freight away from Transnet, but rather increase the transport capacity that the company already provides,” the minister explained. The operators gained access to 41 routes, mainly used for transporting coal, iron ore, chrome, manganese, sugar, and fuel.
Contract conditions include rail safety licenses, availability of rolling stock, and guaranteed unloading capacity at ports. According to the minister, contracts will have durations ranging from one to ten years, aiming to enhance the competitiveness of the national rail network. This year, the government granted $8.5 billion in guarantees to support Transnet’s recovery. However, it acknowledges limited resources to fund infrastructure and overcome logistical delays. The company has also requested an additional $2 billion in financing to ensure improvements in its system.
Freight volumes transported by Transnet fell to 152 million tons between 2023-24, well below the 226 million ton peak recorded in 2017-18. The government expects the new operators to add 20 million tons per year starting next fiscal year, approaching the 250 million ton target by 2029. Barbara Creecy added that the companies could further increase coal export capacity by 10 million tons over the next three years.
Source: Diário Económico
