Online portal launched to help ignite participation in rail and port projects. From Moneyweb.
Transport Minister Barbara Creecy has sent out a call to the private sector: send us your proposals to help build a 21st Century transport system.
Government’s monopoly over rail and port services is clearly at an end. Creecy launched an online Request for Information (RFI) portal “to develop an enabling environment for private sector participation and enhanced investment in rail and port infrastructure and operations”.
These proposals it receives will give government a better understanding of the rail and port environment and what role the private sector is willing to play in reversing the decline of the logistics sector.
The RFI process is not a formal procurement process but a mechanism to understand and source information from the market. These will be followed by Requests for Proposals (RFPs), which should then enjoy improved market engagement.
“As you are all aware, South Africa’s rail and port infrastructure faces substantial challenges, including declining performance; theft and vandalism; under-investment, and operational inefficiencies. All of these hinder trade and economic growth,” said Creecy on Sunday in a briefing to media.
She said the government has learned key lessons from the independent power producer (IPP) process in energy. Several of these projects did not reach financial close because of inadequate research into market appetite and the prevailing energy environment.
“We want to make sure we are guided by current reality in the rail environment and the port environment as we work together with Transnet in our PSP [Private Sector Participation] unit to structure the future RFPs,” she added.
PSP unit
An interim PSP unit has been established within the Department of Transport and will ultimately be hosted by the Development Bank of Southern Africa (DBSA).
Creecy says this unit has the needed expertise to structure PSP contracts and procurement with Transnet. This unit aims to enhance state capacity and provide support to Transnet and the Passenger Rail Agency of South Africa (Prasa) in the procurement of potential PSP projects.
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All information received online at the RFI stage will be treated confidentially and used only to assist in developing potential PSP projects. This is in line with the 2023 cabinet-approved PSP Framework intended to guide private sector involvement across the logistics sector value chain.
Three priority areas
Three transport corridors have been identified in the initial phase, with a project focused on the container and automotive sectors:
- The Northern Cape to Saldanha Bulk Minerals Corridor, used primarily for iron ore and manganese exports; and the Northern Cape to Nelson Mandela Bay Corridor, primarily for manganese exports. This includes pit-to-port rail, port, terminal infrastructure, and supporting equipment.
- The Limpopo and Mpumalanga to Richards Bay Bulk Minerals Corridor PSP Project for coal and chrome exports, including provision for magnetite exports in port.
- The Intermodal Supply Chain PSP Project focused on the container and automotive sectors, including the potential designation of the South African container port system as a regional transshipment hub for major shipping lines. This includes the port, container and automotive port terminals, back-of-port arrangements, and railway and inland terminals.
The online process is well designed and will allow the country to run this next phase of economic reform well, says one logistics expert who asked not to be named. It will assist in accelerating the much-needed unbundling of Transnet.
Financing
Creecy says the state lacks the resources to fund infrastructure and address backlogs, and is inviting the private sector to get involved.
“[The RFI process] is very broad and comprehensive, so anyone who has an interest can participate in the process. Different kinds of entities can apply that can guide us in our work.”
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Future rail and port projects may involve a blend of public and private finance. The intention is to build a 21st Century transport system that will boost industrial competitiveness, deepen regional integration, and drive inclusive economic growth.
The Department of Transport says it will canvass views from a broad range of participants, including organised labour.
Eyeing major private participation
The RFIs are the next major step in the structural reform process to secure major private sector participation.
This goes beyond just access to slots on the rail network for private rail operators, as set out in the recently released Network Statement.
“Participation is likely to take many different forms, including investment, concessions and more, and will be guided by responses to the detailed questionnaire in the RFIs,” explains Ian Bird, senior executive in the Transport & Logistics focal area, Business for South Africa (B4SA).
