TRANSNET said yesterday it was establishing an interim Infrastructure Manager (IM), which would lead to the reform of the country’s rail network by, among others, opening the market to third parties, with effect from April 2024.
A Transport Economic Regulator is also going to be established to set prices for the sale of train slots, and regulate the access regime, include pricing, compliance, penalties and the resolution of disputes between IMs and Train Operating Companies (TOCs).
This follows Cabinet approval in March last year of the White Paper on National Rail Policy, which introduces radical structural reforms in the sector that are intended to enable and facilitate private sector investment, optimal utilisation of rail and effective economic regulation of rail that allows for equitable access to the rail network and ensures that it is properly maintained.
This is as Parliament's Portfolio Committee on Public Enterprises was due to engage with organised labour on the governance, financial and service delivery challenges facing Transnet.
Transnet is currently facing an executive skills haemorrhage as officials - from CEO Portia Derby to chief financial officer Nonkululeko Dlamini - left a leadership vacuum after indicating intentions to leave the organisation as early as the end of November for some and earlier for Dlamini, who is already engaged in a similar capacity at communications group Telkom.
Transnet said the the key commercial objectives of the Infrastructure Manager were to: maximise network utilisation, increase network density, generate revenue through access fees that would fund network maintenance, rehabilitation, and expansion, as well as increase rail market share in economic growth sectors by facilitating road to rail migration.
The Rail Policy states that funding for the infrastructure will be provided by the government to enable the Infrastructure Manager to provide network availability and reliability to freight rail operations throughout South Africa in line with investment plans and allocated funding.
“Access fees will be used to manage the operations cost of the Infrastructure Manager,” Transnet said.
It said the Policy aimed to liberalise the rail sector by regulating rail infrastructure and providing private train operating companies with access to the freight rail network.
This process of liberalisation has been enabled by the introduction of two policies, namely the National Rail Policy White Paper (2022) and the Economic Regulation of Transport Bill (2022) (ERT).
This access will ultimately be regulated by the soon to be established Transport Economic Regulator.
“In accordance with the Economic Regulation of Transport Bill, 2022, the interim Transnet Rail Infrastructure Manager will manage, operate, and maintain the Transnet rail network infrastructure. Transnet Freight Rail Operating Company (TFROC), the initial dominant operator by a significant margin, will compete with other TOCs in the future,“ Transnet said.
TFROC will be responsible for freight rail operations within the Republic and in the region, haulage on network mainline and branch lines, yard operations and train safety; and rolling stock ownership and management,“ Transnet said.
Owing to the long-term nature of organisational design, to comply with the Rail Policy and the ERT Bill, which is undergoing relevant parliamentary processes and to be operationally ready for Phase 2 of open access on 1 April 2024, Transnet’s interim Infrastructure Manager has been established to carry out all required activities to ensure the successful implementation of an Infrastructure Manager.
The interim IM is to engage with the Interim Rail Economic Regulator Capacity (IRERC) and manage access until a permanent structure in a new Operating Division is in place.
It is expected that after the announcement of the interim IM, there will be consultations with the Department of Public Enterprises, the Department of Transport, IRERC and other stakeholders on draft Network Statement: draft Access Agreement and proposed Tariff Methodology.
"On April 1, 2024, the interim IM will publish the Final Draft Network Statement, conditions of access, and the access tariff; and TOCs applications for slots will commence. If a requested slot is available (not run by TFROC), that slot can be provided by May 2024 for trains to run, provided all the necessary conditions and approvals are met,“ Transnet said.