In his Budget speech on Wednesday, Godongwana highlighted the Freight Logistics Roadmap, which outlines immediate steps needed to improve port equipment, locomotive availability and network security. Image: Pixabay
Private rail operator Traxtion Africa yesterday gave the thumbs up to Finance Minister Enoch Godongwana’s plans to address South Africa’s increasingly unreliable logistics system, saying that the private investment into the rail network would stimulate development.
In his Budget speech on Wednesday, Godongwana highlighted the Freight Logistics Roadmap, which outlines immediate steps needed to improve port equipment, locomotive availability and network security.
Godongwana said the roadmap would facilitate the introduction of competition and leveraging the financial and technical support of the private sector.
In this regard, Godongwana said third-party access to the freight rail network would be introduced by May 2024 to mitigate the logistics challenges emanating from Transnet’s operational failures.
Traxtion CEO James Holley yesterday said they were expecting that the industry would announce the first investment into private freight train capacity later in 2024 as a result of this development.
Holley said they were anticipating that the investment would be focused on the bulk freight sectors and this was excellent for the national economy.
“However, the broad-scale successful implementation of rail reform will set the baseline for the revitalisation of the country’s rail network through the implementation of private sector infrastructure concessions,” Holley said.
“To unlock the investment into the new train capacity, the broader economy needs a track infrastructure network which enables the efficient operation of trains. Therefore, the condition of the track infrastructure should be where our national attention is now applied.”
Private sector organisations within the built industry were also buoyed by the government’s plans announced for mega infrastructure development projects.
Godongwana prioritised infrastructure provision with plans to invest more than R943 billion in public infrastructure, which will be used to support the refurbishment and maintenance of existing assets and the building of new infrastructure.
Consulting Engineers South Africa (Cesa) CEO Chris Campbell echoed sentiments expressed by Godongwana regarding the need for tangible actions to bolster economic growth and address pressing issues faced by South Africans.
“We recognise the importance of government spending on infrastructure as a catalyst for economic growth and job creation,” Campbell said.
“However, it is imperative that these funds are utilised efficiently and effectively to maximise its impact on the nation’s development.”
Meanwhile, Godongwana also announced the introduction of fundamental and far-reaching reforms to infrastructure financing and delivery in a bid to streamline procedures, enhance accountability, and introduce new financing instruments.
He said the reforms were to optimise the infrastructure value chain to be effective and efficient, and would strengthen the public investment management and the associated value chain but also attract private sector participation.
The South African Institution of Civil Engineering (Saice) said the constrained fiscal environment necessitated innovative approaches to infrastructure financing.
Saice president Andrew Clothier said the government’s commitment to infrastructure spending was encouraging, but emphasised the importance of transparent and efficient allocation and use of funds.
Clothier said public-private partnership (PPPs) had the potential to leverage private sector capital for construction, stimulating economic growth and job creation.
“Saice’s proposal for a PPP funding solution advocates for the use of bridging loans to fund transaction advisor fees – where the loan is repaid on financial close of the project taken from project funding – and demonstrates our commitment to finding creative solutions to support infrastructure projects and working with the public sector,” he said.
“Furthermore, about the financially challenged state-owned operators such as Transnet and Prasa, while we appreciate the government’s efforts to rebuild these entities, the key concern remains how they plan to strategically allocate funds, build and maintain infrastructure, and reduce debt to generate widespread employment opportunities and economic benefits for all.”
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