Nearly 100 firms apply to gain South Africa rail access

Nearly 100 companies have applied to gain access to South Africa’s rail network for the first time, with Transnet estimating new locomotives and freight could start operating by the end of the year.

The newly created Transnet Rail Infrastructure Manager (TRIM) said it received 98 applications in its first offering of private rail slots, which included parts of the main coal, manganese and iron ore lines. Total capacity available to third parties was 80.6 mt/y, or 166 slots per week.

“We do not know who the applicants are yet, but this is encouraging because it indicates that people are interested and the market is responding positively,” TRIM’s Chief Executive Moshe Motlohi told investors at an Investec event.

Traxtion, the largest private freight operator in Africa, and logistics firm Grindrod are among the few that have publicly stated they were interested in taking part.

TRIM will now go through the adjudication process before successful train operating companies can be announced.

Yolisa Kani, Transnet’s chief business development officer, said the state-owned logistics company had already set aside rolling stock, which is a combination of ring fenced and idle fleet that will be made available for leasing to train operating companies.

“What we are looking at doing is to get a private company on board to partner with us. So, we’ll go into a JV,” Kani said. “They will bring the capital to do the refurbishments and we, on the other hand, will bring the hardcore assets.”

Transnet now hopes to go out to the market within coming weeks to find a private-sector partner. Refurbishment and leasing could see third party rolling stock moving on the rail network within six to 12 months and is much quicker than new-build trains, Kani said.

Transnet has so far received expressions of interest for 6,000 wagons and 100 locomotives.

While there is progress on that front, funding remains a major concern.

To resolve infrastructure issues, TRIM will need an estimated ZAR65bn ($3.6bn) for maintenance and upgrades.

Motlohi said that with the current financial constraints, the company is unable to cover the costs without external funding.

“This puts us under a difficult space of saying, ‘Do you want higher tariffs in order to move forward?’” Motlohi said. “The market does not like it.”