By Lehlohonolo Lehana.
State-owned logistics giant Transnet will issue requests for proposals (RFPs) in August to begin the formal procurement process for Private Sector Participation (PSP) across five priority rail and port corridors.
The announcement was made by Transport minister Barbara Creecy during her Budget Vote address to the National Assembly.
The minister’s approach acknowledges the reality facing Transnet — limited state resources and massive infrastructure backlogs have severely hampered the entity’s ability to fulfil its mandate.
The solution, according to Creecy’s vision, lies in leveraging private capital and expertise while preserving state control over core infrastructure assets.
Under Creecy’s leadership, the department has moved swiftly to realise this vision, establishing an interim Private Sector Participation Unit and finalising an agreement with the Development Bank of Southern Africa to host a permanent unit for managing the process.
Creecy reiterated that the limited availability of State resources to fund infrastructure development made private sector investment critical, albeit under a framework whereby rail lines and ports would remain under public ownership.
She said the recently concluded request for information process would guide the RFPs for private investment on freight-logistics corridors that moved key mineral exports and containers.
However, she also stressed that South Africa could not wait for these PSPs to reach financial close (a process that is expected to take two years to complete) before rehabilitating Transnet’s rail network and rolling stock, as well as port infrastructure and equipment.
She said three funding sources would be tapped for the immediate rehabilitation effort, including: Transnet’s budget for rail and rolling stock maintenance and the purchase of port equipment, which was currently underpinned by government guarantees, which was likely to receive additional guarantees in July; submissions to the National Treasury’s Budget Facility for infrastructure (BFI); and private investment in refurbishing or expanding line capacity through existing customer agreements.
Creecy confirmed that Transnet had submitted an initial application under the BFI for about R16-billion and would also seek another R14-billion when the next quarterly bid window opened in October.
No immediate indication was provided as to what projects the BFI funding would support, but she expressed optimism that Transnet would secure the funding.
The Passenger Rail Agency of South Africa (Prasa) is expected to issue RFPs in October.
New regulations now allow collaborations between Transnet and private sector operators for short-term interventions to repair and upgrade infrastructure, a convenient bridge while longer-term private sector participation arrangements are finalised.