South Africa's Freight Rail Fleet to be Overhauled

South Africa is looking to significantly increase the number of electric and diesel units in parastatal Transnet’s ageing freight rail locomotive fleet, Public Enterprises Minister Malusi Gigaba said on Thursday.

In a speech prepared for delivery to members of the SA Chamber of Commerce and Industry in Johannesburg, Gigaba said an “ambitious fleet renewal strategy” was being designed.

“[This will] see us procure consistent and significant quantities of both electric and diesel locomotives annually over the next 15 years.”

Gigaba said the average age of Transnet’s locomotives was about 33 years.

“We need both to bring down the age of the fleet and add significant capacity if we are to both unlock Transnet’s customer’s growth potential and move goods from road to rail.”

Local manufacturing

This would make South Africa one of the most strategic markets for global locomotive equipment manufacturers, particularly in relation to heavy haul electric models.

“Our plan is to partner the relevant original equipment manufacturers to build South Africa’s locomotive manufacturing capability,” Gigaba said.

“Our aim is to more than double the quantity of local content embodied in the locomotive and to ensure that South Africa becomes a key global manufacturing and niched engineering hub for the relevant original equipment manufacturer.”

Although Transnet had been steadily investing to increase capacity on the country’s key commodity export corridors, this investment was limited by its balance sheet capacity.

“[It] is insufficient to really unlock new investment and growth in our mining sector. Consequently, we need new sources of finance to enable a quantum jump in the rate of investment and in the capacity of these corridors,” Gigaba said.

Exploring partnerships

“The DPE [department of public enterprises] will be exploring partnerships with both development finance and mainstream finance institutions to see how equity and quasi equity finance for these projects can be raised.

“In addition, the department will be engaging with the large mining houses to explore co-investment relationships, given that these company’s have the most to gain through additional investment, but are presently not sharing any of the risk associated with the development of these corridor.”

Referring to the road and rail sectors, Gigaba said the government would initially focus on areas that were complementary to Transnet’s strategies.

“This will include areas such as branch line concessioning, innovative proposals to put cargo from road to rail and reduce road congestion around ports, and inland terminal development.

“We are investigating the establishment of a governance framework to expedite these processes,” he said.