Transnet to sell rail slots to third parties as it moves to liberalise the sector

Transnet Freight Rail

Transnet Freight Rail

Transnet will sell slots on its rail network to third parties in a first step to liberalise rail in South Africa, the state-owned logistics giant announced on Friday.

In the first phase of a slot sales programme, Transnet said 16 slots be up for grabs. Six of these will be for containers and general goods moving between City Deep and Durban. Ten other slots are available between Springfontein in the Free State and East London.

The slot sales allow access to the rail network is the first step toward liberalising the rail sector and the aim is to densify railing routes and move traffic off-road and onto rail.

“This increases the players in the industry, it increases the dynamism of the sector,” said Transnet CEO Portia Derby. “The competition is coming for us, but we are ready for that.”

The slot sales are hoped to enable further movement of agricultural produce and products from the auto industry in particular.

Transnet further hopes the sales process will attract parties with experience in rail logistics. First prize would be for third parties to own their own rolling stock given that Transnet already faces limitations in this regard.

Derby said the slots would have to be acquired “voetstoots” and so third parties would have to grapple with cable theft and other security issues which has adversely impacted Transnet rail’s operations. Slots are likely to be awarded for a limit of two years and mechanisms will put in place to ensure the slots are in fact utilised.

Successful parties will have to be permitted by the Railway Safety Regulator in order to operate on Transnet’s line.

Transnet could not yet say what revenue the slot sales would generate, but did note that the price would have to be subsidised by the SOE as a price reflective of the infrastructure cost would render such an arrangement unattractive to the private sector.

While certain lines have been particularly troubled by security and operational issue, especially the coal line down to Richards Bay, Transnet said all slots on these corridors are already fully utilised and in any case this line makes use of specialised locomotives.

Learnings from the slot sales will inform rail reform policy development as well as ways to improve performance on the corridor, the SOE said.

Transnet said the slot sales would be advertised later on Friday and an information-sharing session will be held on 8 April.