Rail Opportunities in South Africa

An Expert's View about Road Freight in South Africa

Posted on: 5 Oct 2010

South African Government has started an extensive planning and consultation process on the equired infrastructure programme for the next 20 years.

Sector briefing Rail Opportunities in South Africa Why South Africa? South Africa's 30,000km railway route network is the 10th largest rail network in the world and easily the best in Africa. Freight comprises the majority of rail operations (95%), with national inner and inter-city passenger operation only accounting for 5% of network traffic. Approximately 45% of the network is electrified. The 2010 FIFA World Cup as well as road traffic congestion in major cities has acted as major stimuli to improve ailing passenger services. During the 2010 Budget Speech, the Finance Minister announced that government will overview of South Africa?s economy, business continue with its economic services and will culture, potential opportunities and an spend R845 billion (about £74 billion) on introduction to other relevant issue. infrastructure over the next three years. ?Government has started an A significant portion of the expenditure will be extensive planning and undertaken by State-Owned-Enterprises consultation process on the (SOEs). In addition to moving more freight required infrastructure from road to rail; rail safety and train travel programme for the next 20 has been identified as an important public years? transport option by the South African Government. Find general information on the South African market conditions on UKTI?s website. The Doing Business Guide for South Africa gives an UK Trade & Investment Sector briefing: Rail opportunities in South Africa Transnet has undertaken an £8 billion five-year Opportunities Capital Expenditure (CapEx) programme to March 2014, which it hopes will improve its The rail sector in South Africa has suffered ports, rail freight and pipelines? competitive from chronic under-investment and poor efficiency. Transnet has recently announced management over the past 30 years. the establishment of a £1.3 billion Global Transnet?s stated goal is by 2012 to have a Medium-Term Note (GMTN) on the London world-class freight railway. Commuter rail in Stock Exchange in an attempt to fund its South Africa is in far more precarious state, but CapEx programme. The GMTN will enable the the government has realised this by investing company to issue bonds in either the US or in the Passenger Rail Agency of South Africa European Debt Capital Markets when (PRASA). conditions are favourable and cost effective. The GMTN will be used to complement Current activities by various government Transnet?s £2.6 billion Domestic Medium-Term organs are highlighted below: Note (DMTN) programme, helping the company to diversify source of funds. Gautrain Rapid Rail Link: www.gautrain.com About £3.3 billion of Transnet?s CapEx is being Construction of the R30 billion Gautrain Rapid spent on TFR?s Vulindlela programme. This Rail Link is nearing completion, with an programme includes upgrades to improve the estimated R17.5 billion already spent on the coal line infrastructure to 78 million project. The Gautrain, an 80km rail link, will tonnes/year; expanding the ore line connect the City of Johannesburg, City of infrastructure to 47 million tonnes/year; Pretoria and the OR Tambo International general freight and maintenance. Transnet had Airport. Phase 1 of the project, linking spent R19 billion in capital programmes in the Johannesburg?s main business district of year ending 31 March 2009. This is a 22% Sandton and OR Tambo International Airport, increase on the £1.3 billion spent in the is scheduled for completion before the start of previous year. A further £5 billion will be spent the 2010 FIFA World Cup, and Phase 2 will be in the next 3 years. completed by end of 2011. Bombardier Transportation UK supplied a total of 96 rail PRASA: www.prasa.com cars for the project, of which most will be delivered in pieces from Derby, UK, and PRASA is the newly formed state-owned assembled in South Africa. enterprise responsible for passenger rail, inter- city buses and property management. It is the Gautrain's 24 train sets of four rail cars each only government owned vehicle in the public (96 rails cars in total) will travel at 160km/h, transport arena and enables 2.4 million 18hrs/day, together making around 135,000 passenger trips per day. PRASA?s role is to passenger trips a day. Secondary transport to effectively develop and manage rail and related and from stations and nearby destinations will transport infrastructure and to provide efficient be provided by luxury feeder buses. There will rail and road passenger services. The company be 10 stations, three of which will be has also introduced various high-end ?business underground. The underground tunnel section express? trains to augment its offering and will be about 14km long and up to 96m below income stream. the surface in some places. PRASA spent £443 million in capital Transnet: www.transnet.net expenditure in the 2008/9 financial year compared to £70 million in the previous year. Transnet is a state-owned enterprise Over 700 upgraded coaches were introduced responsible for freight rail, ports and pipelines. through its Accelerated Rolling Stock It is controlled by the Department of Public Programme, a 45% increase from the previous Enterprises. Its freight division, Transnet year. The programme also looks to bring rolling Freight Rail (TFR), is the largest rail and heavy stock back to a normal nine year cycle instead haulier in southern Africa, with about of the current 12 year cycle. PRASA spent £212 22,000km of rail network, of which about million on this programme. 1,500km is heavy haul lines. The company's rail infrastructure connects the ports with the Punctuality in passenger rail services improved rest of South Africa. to 87%, which the agency admits is still UK Trade & Investment Sector briefing: Rail opportunities in South Africa significantly lower to its target of 90%. Ageing fleet, heavy rainfalls and signal failures are the main challenges to the agency?s reliability score. PRASA is looking to ensure visible improvements in on-time performance, Key methods of doing reduced cancellations, overcrowding, safety business in South Africa and quality station facilities are delivered to its customers. Products must comply with the specifications and generally adhere to the South African PRASA will also take lead as the Department of Bureau of Standards (similar to British Transport (DoT) plans to go ahead with its Standards), although there is a move towards 140km-long rail line between the City of ISO standards. Pretoria in Gauteng and the town of Siyabuswa in Mpumalanga province. The DoT plans to Transnet and PRASA fully endorse and support spent more than £825 million and create more the government?s broad-based Black Economic than 800 jobs during construction of the line. Empowerment (bbBEE) policy. They prefer to This project will form Phase 1 of the Moloto Rail do business with local business enterprises that Development Corridor, which aims to improve possess a bbBEE level of at least a ?level 4?. regional linkages between the Gauteng province and neighbouring Mpumalanga Companies must also clearly put forward their province. Phase 2 will link rural communities in skills development/transfer strategy for local the north-western region from Siyabuswa to partners and/or employees. When these the town of Sekhukhune in Limpopo province parastatals invite prospective suppliers to and the town of Burgersfort in Mpumalanga tender for goods and services, they province. consequently urge respondents to obtain accreditation from one of various Verification Agencies, who rate companies in accordance with the latest bbBEE Codes of Good Practice. International tenderers are advised to enter into a Joint Venture or subcontract portions of the contract to local bbBEE companies and must state in their tenders the percentage, of the total contract value that will be allocated to such bbBEE companies, should they be successful in being awarded any business. A rating certificate in respect of such bbBEE Joint Venture-partners and/or sub-contractor/s, as well as a breakdown of the distribution of the aforementioned percentage must also be furnished with the tender response to enable Transnet to evaluate all tenders received on a fair basis. If you have any questions on the opportunities above, contact UKTI South Africa. Rail contacts are named in this report. Business opportunities aimed specifically at UK companies are added daily to UKTI?s website. These leads are sourced by our staff overseas in British Embassies, High Commissions and Consulates, across all sectors and in over 100 markets. You can be alerted to South Africa/Rail opportunities on a regular basis by registering UK Trade & Investment Sector briefing: Rail opportunities in South Africa on the UKTI website. More on UKTI?s business opportunities service UK Trade & Investment Sector briefing: Rail opportunities in South Africa Major events and activities UKTI contacts Africa Rail 2010 Thando Thomas 31 May ? 04 June 2010 Trade & Investment Research Manager Sandton Convention Centre UK Trade & Investment South Africa Maude Street Tel: +27 (0)11 537 7207 Sandton Email: thando.thomas@fco.gov.uk Johannesburg 2196 www.ukti.gov.uk Contact: Alannah van Onselen Corporate Business Development Manager Terrapinn Ltd Tel: +27 (0)11 516 4951 Email:alannah.vanonselen@terrapinn.co.za www.terrapinn.com/2010/railza/ Find full details of all events in South Africa on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: Rail opportunities in South Africa Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the South Africa market are you to meet contacts and promote your advised to undertake as much market research company in the Chinese market and planning as possible in the UK. UKTI?s team in South Africa, with its wide local This work is available via our Overseas Market knowledge and experience, can provide a Introduction Service (OMIS) a chargeable range of services to British-based companies service which assists British-based companies wishing to grow their business in global wishing to enter or expand their business in markets. overseas markets. This can include: To find out more about commissioning this ? Provision of market information work, or accessing other UKTI services and ? Validated lists of agents/distributors specialist advice, please visit the UKTI website ? Key market players or potential to find contact details for your local UKTI customers in the Chinese market office. ? Establishment of interest of such contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Rail opportunities in South Africa
Posted: 05 October 2010

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