South Africa’s vast railway network is on the verge of a shake-up that will introduce third party access to it, but it needs about R14bn a year of investment in its six corridors, which have been plagued by theft, vandalism and outdated systems, Transnet says.
Cash-strapped Transnet, which last week reported a R2.2bn interim loss for the six months ended September, operates the country’s 21,323km of rail infrastructure.
In December transport minister Barbara Creecy approved the publishing of the Transnet Network Statement, a major step in facilitating open access to the country’s rail network by third party operators, and a move welcomed by the business community and industry players.
The move is also expected to alleviate pressure on the road network. However, the network statement shows the rail network needs enormous amounts of money for refurbishment, with theft and vandalism of Transnet’s corridors having become a daily occurrence.
The statement said the north corridor, which houses the heavy haul export line between Ermelo and Richards Bay, has faced serious vandalism over the past five years. It said the corridor’s traction and distribution have substations that are offline due to theft and vandalism, and the deterioration of track condition in some areas has led to implementation of speed restrictions.
In the previous year the number of security incidents (1,334) were averaging three a day.
— Barbara Creecy, transport minister
It said the corridor needs an average R3.1bn a year to “cover the preventive and corrective asset restoration scope under perway, signalling, electrical, technical support and telecoms”.
The slot capacity utilisation on the corridor has been reduced due to signal cabling theft across the network.
“In the previous year the number of security incidents (1,334) were averaging three a day.”
The northeast corridor, which links SA rail freight transportation with that of Southern African Development Community) countries, mainly through Eswatini, Zimbabwe, Mozambique, Zambia and Democratic Republic of Congo, averages two theft incidents a day. The corridor requires R1.47bn a year to cover its preventive and asset restoration needs.
The iron ore corridor, which stretches from Sishen in Northern Cape to Saldanha on the Western Cape coast, reported 28 security incidents in the previous year and needs R1.9bn a year for its asset restoration programme.
Slot capacity at the Cape corridor has been hammered by vandalism incidents, which average four a day, with the corridor needing R3.1bn in restorative capital investment.
The central corridor, which is geographically spread over Gauteng, Free State and North West, averages six security incidents a day, and needs R1.39bn a year to get its network to an optimal level.
The container corridor, which is the backbone of SA’s general freight rail transportation network, averages five security incidents a day, limiting its slot capacity utilisation. The corridor needs R2.9bn a year for its preventive and asset restoration programme.
Fiscal support
“The quantum of investment required to rehabilitate [at a minimum] lines of economic importance by far exceeds Transnet capacity for funding thresholds and therefore the IM [Transnet Rail infrastructure manager] is urgently seeking fiscal support to address the underlying issues, stabilise the rail network and bolster economic growth,” the network statement reads.
“Though alternative funding sources through private sector participation are being explored, these are envisaged to take considerable time to implement. In the interim, capacity needs to be restored to enable rail reform.”
Transnet, which is servicing its debt at a cost of R1bn a month, was last month put on a credit watch by S&P Global, putting the entity at greater risk of a credit downgrade. S&P said while it expected the entity’s operational performance to improve, this would not be complemented by robust growth in cash flow, with the group’s capital expenditure requirements and debt servicing costs remaining elevated, and in its view “leaving limited room for operational underperformance”.
The ratings agency expects the state-owned entity’s debt to balloon to R151bn in 2025. Transnet’s latest results would have given S&P and other ratings agencies comfort about the entity’s balance sheet.
The network statement acknowledged SA’s rail infrastructure has not kept pace with evolving logistics needs, particularly in supporting the industrial sectors.
It said: “SA’s rail infrastructure is in a critical state of disrepair, marked by visible deterioration attributed to prolonged underinvestment, theft and vandalism. The decline has led to significant reductions in transportable rail freight volumes, dropping from 226-million tonnes in the 2017/18 fiscal year to 152-million tonnes in 2023/24.”
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