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Transnet’s turnaround plan appears to be making progress, with South African-made locomotives improving the capacity and efficiency of its North Corridor, which transports coal for export and to Eskom’s power stations.
Around 18 locally-made locomotives are already operating on this corridor, and the number is expected to rise to 90 within the next 15 months.
This effectively breaks Transnet’s impasse with getting replacement parts for Chinese-manufactured locomotives from the China Railway Rolling Stock Corporation (CRRC).
CRRC refused to give the state-owned company spare parts as retaliation for SARS claiming it owed the taxman billions of rand for work done during state capture.
Competitors had also alleged that the company was involved in corruption during that time and unfairly won some of its contracts and tenders.
The lack of replacement parts effectively hamstrung Transnet’s operations along the North Corridor, as it could never run at full capacity or make full use of its equipment.
Logistics professor at Stellenbosch University Jan Havenga said the locally-made locomotives will make a massive difference to the performance of a crucial rail corridor.
“It is great news. Richards Bay Coal Terminal (RBCT) is now aiming to process around 60 million tonnes of coal this year, which is around 8 million more than previous targets. That is significant,” Havenga told 702.
Breaking CRRC’s hold on the performance of the North Corridor solves a significant share of the problems that coal exporters have faced in recent years.
Havenga estimates that using locally-made locomotives will remove around 20% of the total constraints on coal export.
Crucially, it shows the new management team’s turnaround plan is gaining momentum, with this being the first concrete evidence of improvement.
It also removes an excuse that was commonly used by Transnet to explain away its poor performance and shift blame.
Previous management teams often pointed to CRRC’s refusal to supply replacement parts as the reason for the utility’s continued poor performance and absolved them of responsibility, Havenga said.
This is no longer the case with the use of new, locally-made locomotives.
Havenga also explained that this development opens up significant opportunities for South Africa to become the railway hub of Africa once again.
The manufacturing of locomotives locally puts South Africa in a position to export its products throughout the continent, similar to the automotive sector.
Alstom manufactures the locomotives used on the North Corridor and finally assembled at Transnet Engineering’s facilities in Durban.
Alstom also manufactures around 600 suburban trains from its facility in Nigel, which the Passenger Rail Agency of South Africa will use.
Havenga is confident that this momentum will be sustained as Transnet’s new management team and the Transport Minister are committed to the ongoing reform of the sector.
However, he was clear that this does not mean that Transnet and South Africa are out of the woods yet, with significant problems still needing to be dealt with.
“The problems that we are going to sit with now are not technical issues but are those to do with the policy reform process.”
Substantial progress has been made on this front, with the publishing of the Network Statement and the inclusion of a framework to govern tariffs charged to private operators.
The progress has been far too slow, with the situation requiring far more urgency as the crisis at Transnet is the largest constraint on South Africa’s economy now that load-shedding has seemingly ended.
The next step is to repair and expand Transnet’s rail network to increase efficiency and reduce wastage. Havenga said this cannot be done piecemeal and corridor by corridor but must be a complete overhaul.
“We have not completely solved the problem yet of how we are going to invest money into improving the rail network,” he explained.
“Transnet itself is a major obstacle in this regard. Its financial health prevents it from investing in the network as it is sitting with over R140 billion in debt.”
“It needs to be unbundled, and if this can be done effectively, then the crisis can be solved.”
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