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3rd Party Access- Frequently Asked Questions (FAQ's)

            

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1. Is Transnet privatising TFR?    No; this expands the access that Transnet already grants approved Branch Lines Operators, Steam Train Operators and PRASA Rail to its rail network.  It is a significant further step towards the South African Rail Reform agenda set out in the National Transport Policy and Draft White Paper on National Rail Policy.  Transnet’s advertisement of available slots released on 1 April 2022 follows
President Ramaphosa’s announcement at the 2022 SONA less than 2 months ago.  
     
2. Why the need for 3rd Party Operator access?    Rail reform is not unique to South Africa but is a global phenomenon where railways have implemented multi-user network systems. This is done to improve route density, increase railway capacity, advance technological innovation, aid in providing funding required to increase investment in maintenance and improve overall railway efficiencies and service quality. What this means for us, is that if successfully executed we will reduce the cost of logistics for the South African economy, improving overall economic competitiveness.
     
3. What kind of access are we talking about?   Transnet will give qualifying 3rd Party Operators access to the Container Corridor and South Corridor. The first phase will be through the sale of slots. Slots mean the temporary occupation of sections of the network to enable end to end passage of a train. These will be sold on a take or pay basis to 3rd party operators by means of a transparent, open market process. We have identified six slots on the Container Corridor (Durban to City Deep) and are looking at ten between East London and Springfontein. The sale of these slots will be used as a pilot which will enable us to ring-fence the business operationally in order to establish the cost of the network and commercially to determine tariffs and pricing models
     
4. Why have you selected these corridors?   The Container Corridor and the South Corridor (Gauteng to East London) are key to the South Africa’s main growth sectors, particularly manufacturing, automotive and agricultural goods.   The Container Corridor links the Port of Durban to the Gauteng economic hub through an extensive rail network of roughly 714km.  The Railway connection between the Transnet’s container terminals in Port of Durban and Transnet’s inland terminals in City Deep, Kascon, Pretcon, Kaalfontein, and several accredited private sidings in Gauteng, is crucial to expanding the bonded facilities network beyond the port.  This is critical to supply chain efficiencies and reducing congestion in the Port of Durban.  The South Corridor provides a strategic route between Gauteng the Ports of East London and Port Elizabeth, that can be customised and configured to suit the unique requirements of rapidly expanding automotive sector.  This is crucial to improving South Africa’s global competitiveness as a growing automotive manufacturing country.
     
5. How do you intend to sell these slots?   The 3rd party access will be valid for two years during the pilot phase. It will be on a take or pay basis and therefore will be awarded to operators who are operationally ready or who can start operating within a month of the award process. Also, allocation will favor operators who best utilize the maximum train configuration, like 50 wagon container trains with multiple customer cargo or 40 wagon automotive trains because this ensures the most efficient use of the slot with less implementation complexities
     
6. How long will TFR sell a slot to a client?   For phase 1, the slots will be sold on a two-year contract basis as a first phase of 3rd party access
     
7. How do you determine the slot cost?   A pricing model will be based on a cost pricing methodology, determining the minimum requirement revenue for the network to recover cost and allowable return, like in other regulated environments such as Ports and Eskom.  The tariff calculated will be charged per net ton kilometre.
     
8.  How do you ensure that the 3rd party’s rolling stock complies with safety requirements?   The slots will be operated “Voetstoets” and 3rd party operators must comply with the current rolling stock requirements as prescribed by Transnet and the Railway Safety Regulator (RSR). The RSR will establish qualification criteria for network access/operator for the routes as well as register and certify the operators.
     
9.  What happens after the pilot phase?   During phase 1 the parties will enter into a Third-Party Access Agreement which will allow them to assess the outcome of the pilot. This together with the Shareholder mandate will inform the development of a suitable access regime for South Africa going forward.
     
10.  Rail infrastructure is in poor shape; how do you expect 3rd party operators to    perform?   We believe that this pilot project will provide key insights as inputs to the development of a robust rail reform regime that is fit for purpose for the benefit of the South African economy and its people.
     
11.  Will this have any impact on PRASA?   Some slots might run over a PRASA network, in which case Transnet will deal with how PRASA, as a separate network owner, grants and controls access. What we envisage is that the Transnet Infrastructure Manager will manage this on behalf of PRASA to eliminate the need for an operator to interface with 2 separate network owners.
     
12. Will this affect your staff and is Labour on board?   This will have no impact on staff and Labour has representation on the 3rd party access planning committee. I must add that we have spent and continue to spend much time engaging stakeholders regarding this initiative. We are also engaging the Minister of Labour with the view to establish a Rail Sector Bargaining Council to ensure a level playing field.
     
13.  What steps is Transnet taking to prepare for the opening of the market?   TFR has studied railway reforms in a number of overseas countries and other sources like the “world bank rail reform tool kit” to inform the process and timelines required to be ready for a Reformed Access Regime and has initiated a readiness programme that will first separate Rail Network Management and Operations accounts (6-12 months process). Then TFR will progress to commercial separation of the functions and create access frameworks (which should take another 6 months). The last phase will entail finalization of a full 3rd party access regime in consultation with policy makers and labour. TFR is currently in consultations with government and other stakeholders regarding the 3rd Party Access draft policies.