New Transport minister Barbara Creecy says her department wants to adopt the same strategies and methods used with Eskom to bring the private sector on board to assist in solving “current and future logistics challenges.”<\/p>\n\n\n\n
This indicates that the seventh administration aims to continue some of the reforms started in the previous administration, bringing private sector partners into various entities that have been struggling operationally in the hope of improving their fortunes.<\/p>\n\n\n\n
During her budget vote speech in the National Assembly on 15 May 2024, Creecy revealed that one of her department’s plans is to create a private sector participation (PSP) unit<\/strong>, after seeing the opportunities that emerged from similar initiatives in the electricity sector.<\/p>\n\n\n\n Its primary objective would be to identify suitable areas for private sector participation in rail and ports.<\/p>\n\n\n\n The unit will comprise those “with the necessary skills and expertise in the design, negotiation and contracting of projects so that innovative practices can assist” to assist in solving various woes within the logistics industry, the minister said.<\/p>\n\n\n\n This is because the minister wants to “revitalise,” the railway sector to become the “backbone of the transport system.<\/p>\n\n\n\n In 2023, Cabinet approved the White Paper on Rail Policy, which has various far-reaching recommendations on the future of freight rail and urban commuter rail, which includes that of PSP.<\/p>\n\n\n\n “This Policy must be implemented with speed so that the country\u2019s railway sector can be revitalised… We must harness the potential of our freight rail infrastructure to foster long term, sustainable economic growth,” said the minister<\/p>\n\n\n\n Speaking specifically about rail, Creecy said that “a planning component will be established to consider the strategic value of branch lines and unlock both state and private investment in lines which have economic potential and logistics capacity.”<\/p>\n\n\n\n “The planning component will assist in furthering the expansion and regional integration of our rail network, and ensure gradual compliance with standards,” she added.<\/p>\n\n\n\n The minister started her speech by saying that the “sector is not operating as either an effective economic facilitator or as a much-needed social service.” <\/p>\n\n\n\n She cited the country’s freight system’s long delays in the movement of key bulk minerals, containers, and vehicles, “deteriorated road systems,” and high road accident fatality numbers, among others.<\/p>\n\n\n\n “An efficient and functioning transport sector that moves people and goods safely, speedily and affordably across the length and breadth of our country is the key to a successful economy,” said Creecy.<\/p>\n\n\n\n However, this has largely not been the case, which has damaged the country’s economy.<\/p>\n\n\n\n “Dysfunctional port terminals resulted in long waiting times for ships wishing to berth, as well as congestion at strategic border crossings and key national highway corridors,” said Creecy.<\/p>\n\n\n\n “Our freight rail system [has been] characterised by maintenance backlogs, cable theft, and skills shortages.”<\/p>\n\n\n\n “Our road systems deteriorated throughout the country, and many provinces failed to execute maintenance and new build programmes, resulting in unspent funds being returned to the National Treasury. In a country where citizens must daily navigate the hazards of potholes, it is unconscionable,” said Creecy.<\/p>\n\n\n\n The government, in collaboration with businesses and unions, formed the National Logistics Crisis Committee (NLCC) in June 2023 as a hopeful response to various crises within South African logistics.<\/p>\n\n\n\n The NLCC’s outlined aims include that of enhancing supply chain operations, modernising freight transport for better efficiency and competitiveness, and adjust regulations to ensure efficient procurement and sufficient network maintenance funding.<\/p>\n\n\n\n In December 2023, under the Freight Logistics Roadmap overseen by the NLCC, the development of a framework for PSP was approved, which outlines structural and contractual requirements to enable such participation. <\/p>\n\n\n\n State-owned freight, ports and logistics company Transnet has already embarked on a programme for PSP. <\/p>\n\n\n\n It has begun opening its rail network by selling rail slots to third parties or private sector players, and has also contracted with a Philippine ports operator to run the Durban container terminal. <\/p>\n\n\n\n