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1. Is
Transnet privatising TFR? |
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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. |
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2. Why the
need for 3rd Party
Operator access? |
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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. |
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3. What kind of access are we
talking about? |
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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 |
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4. Why have you selected these
corridors? |
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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. |
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5. How do you intend to sell
these slots? |
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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 |
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6. How long will TFR sell a slot
to a client? |
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For phase 1, the slots
will be sold on a two-year contract basis as a first phase of 3rd party access |
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7. How do you determine the slot
cost? |
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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. |
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8. How do you ensure that the 3rd party’s rolling stock
complies with safety requirements? |
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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. |
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9. What happens after the pilot phase? |
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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. |
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10. Rail infrastructure is in
poor shape; how do you expect 3rd party operators to perform? |
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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. |
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11. Will this have any
impact on PRASA? |
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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. |
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12. Will this affect your staff and is Labour on board? |
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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. |
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13. What steps is Transnet
taking to prepare for the opening of the market? |
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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. |
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