Transnet will come to market within the next six months to seek private partners for a series of new rail and port projects as it pushes ahead with reforms that will open up SA’s logistics industry and mobilise substantial private investment and expertise to tackle the logistics crisis.
It plans to put a R20bn new manganese export terminal in Ngqura out to market in May and to come back to market with a project to upgrade the container corridor between Durban and Johannesburg. Also high on the list is a private partnership to develop port and rail infrastructure for the Ukuvuselela automotive corridor between Pretoria and the Eastern Cape. The group is also targeting the dry bulk terminal at Richards Bay and a new locomotive leasing company for private sector participation.
The slew of projects gives effect to the government’s road map for the freight logistics industry and aligns with the conditions that finance minister Enoch Godongwana set Transnet when he granted it a R47bn guarantee at end-2023. And while Transnet has been seen in the past to be resisting efforts to dent its monopoly by imposing unworkable conditions on potential private partners, it has forged ahead with urgency over the past year since CEO Michelle Phillips was appointed.
“We’ve embraced the transformation and we are trying to get this reform moving,” Phillips told Business Day last week.
The projects, all of which she wants to put out to the market by June, come after December’s long-awaited rail network statement, which opens the way for new private sector “third party” operators to put their trains on Transnet’s network for the first time. Applications for slots on the network close on February 7. “When the first operator is ready to start working on the network, we will be ready,” Phillips said.
We’ve embraced the transformation and we are trying to get this reform moving.
— CEO Michelle Phillips
Transnet has emphasised, however, that R70bn will need to be invested in the rail network infrastructure over the next five years to get it up to standard. The group is in talks with customers and with the government on how to fund this.
A flagship private partnership deal at the Durban port’s container terminal 2, put in place under Phillips’ predecessor Portia Molefe, has been mired in litigation. Phillips hopes that it too will be concluded by June. Doing a similar private deal at the Cape Town port was not part of her plan, she said.
The Vuselela automotive rail corridor project has long been on the cards but Transnet, which has worked with the Industrial Development Corporation on preparing it, is now ready to take it to market.
The new Ngqura manganese terminal has also been long in the making but Transnet now plans to issue it out to the market as one big package that includes the port terminal and the rail connection. The manganese facility at the Gqeberha port is beyond its lifespan and manganese has been going out through a variety of channels, but there is huge demand for manganese capacity, Phillips said. Transnet is carrying out a bankable feasibility study and wants to get to market by May. “It’s a catalytic project that we need to push with speed,” Phillips said.
The Durban-Joburg container corridor is a loss-making one for Transnet but important for “SA Inc”. Transnet cancelled plans to concession it to the private sector at end-2023, because the industry was waiting for finality on third-party access to the network, but will now bring the project back to market in March or April. Market estimates at the time put the potential investment in infrastructure at up to R10bn.
Phillips also wants to get the Richards Bay dry bulk terminal, for chrome and magnetite, to market in April or May so that a private partner can come in to invest in modernising the terminal’s archaic infrastructure and operating it. And the group will in March seek a private partner for Transnet Engineering.
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