Ramaphosa affirms private sector investment in freight rail

President Cyril Ramaphosa has endorsed the government’s decision to allow the private sector to take over the running of some of the country’s rail network.

Ramaphosa made the announcement during the delivery of his state of the nation address in parliament on Thursday night.

Ramaphosa made the announcement as the state-owned logistics firm Transnet battles to run the country’s rail network, largely used to move goods between the country’s harbours and industrial hubs, which has been identified as one of the issues stifling the growth of the economy.

“Transnet has appointed an international terminal operator to help expand and improve its largest terminal at the Port of Durban.   

“And we are overhauling the freight rail system by allowing private rail operators to access the rail network.

Ramaphosa said they will continue to lobby for more private sector investment in the energy sector, in a bid to help end Eskom’s load-shedding.

Private investment in Eskom and Transnet will be streamlined into specific sectors of the business and will not amount to total privatisation of the SOEs.

In Eskom, private investment will be on energy generation and transmission as the power utility plans to build more than 14,000km of transmission lines.

Delivering his eighth Sona, the last one of his first term in office, Ramaphosa said these interventions, coupled with the R254bn debt relief package, will see the two SOEs which are critical to the country’s economy, become competitive and enable economic growth.

Ramaphosa said his government was on track to resolve the most important constraints on economic growth by stabilising energy supply and fixing the logistics system.

“As these obstacles are removed, the true potential of our economy is unleashed,” he said. 

Private investment in the Eskom grid was, according to Ramaphosa, already helping to reduce load-shedding which was on stage 2 as he delivered his speech.

“We have implemented sweeping regulatory reforms to enable private investment in electricity generation, with more than 120 new private energy projects now in development,” he said.

“These are phenomenal developments that are driving the restructuring of our electricity sector in line with what many other economies have done to increase competitiveness and bring down prices.” 

Ramaphosa said he was confident that, with these interventions, “the worst is behind us and the end of load-shedding is finally within reach”. 

To ensure that the country never faces the load-shedding crisis again, the power utility will build 14,000km of new transmission lines to accommodate renewable energy.

“To fast-track this process, we will enable private investment in transmission infrastructure through a variety of innovative investment models,” he said.

“Last year, we tabled the Electricity Regulation Amendment Bill to support the restructuring of Eskom and to establish a competitive electricity market.” 

The plans for renewable energy are meant to position the country’s economy for a future shaped by climate and green technologies.

On Transnet, Ramaphosa said his government was taking action to improve the ports and the rail network to deal with the severe inefficiencies in the freight logistics system. 

These include reform of the logistics system and stabilising the performance of Transnet.

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