Has Transnet’s plan to open its freight network to the private sector derailed?

Issued by Ghaleb Cachalia MP – DA Shadow Minister of Public Enterprises
29 May 2023 in News

Note to editors: Please find attached soundbite by Ghaleb Cachalia MP.

In April 2022, Transnet Freight Rail invited bids from interested parties to operate sections of its freight network as it sought to improve deteriorating rail infrastructure that was affecting its ability to move goods timeously to the ports. Since then, there has not been an update on the outcome of this request for bids.

The DA has submitted written questions to the Minister of Public Enterprises, Pravin Gordhan, requesting that he provides an update on the outcome of Transnet’s freight rail plan and the progress that has been made in fast-tracking the participation of the private sector on its major corridors.

Transnet has become a major obstacle to the country’s ability to earn foreign currency as the amount of goods transported on its rail network corridor continues to decline markedly. This decline in performance has been met with a wall of silence from the Transnet CEO, Portia Derby, and Gordhan. The claim of ‘green shoots’ in Transnet operations is a potemkin illusion that seeks to paper over the continued decline in Transnet performance.

The impact of the decline in Transnet Freight Rail operations has been devastating across the board, with key industries struggling to keep their value chain operations on track:

  • Astral foods, the largest chicken producer in the country, says 95% of its raw materials used to be transported by Transnet. That has now reduced to 5% and they now rely on trucks, at 4 times the cost.
  • Transnet used to export 53% of BMW’s cars, but due to capacity constraints it is now only able to transport between 35% and 45% of its contractual obligations.
  • The mining sector has been the hardest hit by Transnet inefficiency, with one mining executive describing the further deterioration in performance of Transnet Freight Rail (TFR) this year as “treasonous”.

The South African economy is already on its knees and we simply can’t afford to have maladministration at one of our key economic enablers go the way of other moribund SOEs. South Africa should do everything it can to keep the export value chain operating at all costs if we still care about protecting what’s left of the South African economy.