Transnet to concession more lines

Transnet‚ the state-owned freight and logistics entity‚ was preparing to concession more branch lines to private business and boost its road-to-rail tonnage by 18.9 million tons this year‚ it told parliament this week.

Transnet is looking to move more than 350 million tons of cargo a year by 2019.

This would be done by shifting goods from road to rail and through its R300-billion market demand strategy.

It plans to spend R200-billion on infrastructure.

Earlier this month‚ Transnet became the first state-owned company to secure significant financing from China.

It signed a R30-billion loan agreement over 15 years with the China Development Bank to fund its locomotive build programme.

Transnet has embarked on its biggest recapitalisation to date‚ including a R50-billion programme to procure 1064 locomotives.

Last month‚ Transnet made the first call for proposals for one of its branch lines linking Kimberley and De Aar in the Northern Cape.

General manager for sales and marketing Ravi Nair told the portfolio committee on public enterprise on Wednesday the company would investigate further concessioning branch lines in an attempt to arrest the “death curve”‚ which undermined its nonperforming units‚ such as agriculture and containers.

“Our mining and chrome unit grew from 16.1% to 18.5%‚ due to carrying more goods from road to rail. Agriculture and bulk was static and this is where we mainly have customers who use branch lines.

“We will soon go to market to test concessions on branch lines to arrest the decline‚” Nair said.

He cited a host of planned capital investments that would see its units grow.

These included plans to purchase “road railer” engines‚ which can be operated on both road and rail. They would be produced locally. He said 150 locomotives had arrived to supplement the ageing fleet.

The operator would set up “nerve centres” for each business unit and would discuss pricing regimes that had high growth potential with customers.

The steel unit had grown “marginally”‚ while the container and automotive business had improved thanks to more vehicles being moved by rail‚ he said.

Transnet’s group executive for results management  Raisibe Lepule said the 18.9 million tons  the company’s units would transport would come from its coal‚ steel‚ cement‚ iron-ore and manganese units. Transnet moved 210 million tons last year‚ she said.

“Through growing our key units‚ the 18.9 million tons is what we would like to add to whatever we carry in this financial year,”  she said.

Economist Andrew Marsay said Transnet’s branch lines would be more attractive to private investors if they were subsidised. It needed more strategic partnerships with key customers in stronger units.

“Concessions could be better used to operate the main lines.

“But to think  they can change a poorly operating branch line by getting business to buy into it is whistling in the dark.

“They are seeing the need for concessions because the lines are not providing value for them.”

While Transnet is one of the world’s best railway operators‚ its ownership of the smaller but profitable ports operations allow it to borrow money which it spends on operations that are not necessarily viable‚ such as containers.

More is transported via road because rail does not give businesses control of the goods.

Nair said Transnet had a maintenance backlog of R40-billion‚ which it wanted to reduce to R35-billion. This had to be done through capital investment as some infrastructure was in such disrepair  maintenance was no longer possible.