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MPs to Transnet: Fix this mess you are creating for the ANC government

16th February 2023

By: News24Wire

  

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African National Congress (ANC) and Economic Freedom Fighters (EFF) MPs tore into Transnet Group CEO Portia Derby on Wednesday, accusing her of "doing nothing" to arrest the company's slide into dysfunction and reprimanding her for privatising parts of its operations, which they said was not government policy. 

The attack on Derby follows that on Eskom CEO André de Ruyter a week ago by the same MPs in the Public Enterprises Portfolio Committee and comes as the ANC begins to fear the consequences of failing State-owned enterprises at the ballot box. 

Derby, her top executives, and members of the Transnet board delivered a detailed presentation to the committee, explaining the difficulties faced by Transnet Freight Rail (TFR) and the large amounts of investment required to restore rail infrastructure, which was not likely to be forthcoming from the government. 

Two weeks ago, TFR announced that it would concession the country's most important freight corridor, from Durban to Johannesburg, to a private sector company for 20 years. The concessionaire must invest at least R3 billion in the infrastructure. The move is the most significant privatisation in SA since Telkom in 1997. 

But MPs were not impressed. ANC member of the committee, Judith Tshabalala said:

The ANC government is ridiculed by the public and voters, who say we have failed. But you run these entities. You are responsible for implementing government policy. The ANC government never told you to privatise anything… I'm not finding much you have done to turn around the situation. Fix up this mess you are creating for the ANC government.

Tshabalala was preceded by numerous similar contributions from ANC members, underlining the gulf between ordinary MPs and President Cyril Ramaphosa's Cabinet, which has endorsed "private participation" in public infrastructure, particularly in logistics. 

In her presentation, Derby drew attention to challenges faced by TFR which included issues with locomotive contracts and the unavailability of spares, crippling theft and vandalism, and "systemic underinvestment" that has decreased reliability and increased derailments and accidents.

Responding to MPs, Derby said she understood their frustrations but reminded them that the National Rail Policy, which had been approved by Cabinet, opened the way for third-party access to the rail network. TFR did not have the financial resources to use the full capacity of its network. 

"Total available capacity is 230 megatons a year, and we are not able to move it ourselves. From a South African perspective, and even from a Transnet perspective, it is really important that we are able to move it. So, if other people can enable us to move then it is essential that we bring them on," she said.

The CEO of TFR Siza Mzimela said the Durban to Joburg freight corridor had been loss-making since 2016/17 and lost significant market share to truckers.

"It is a critical corridor to move freight from road to rail. The reason why we are sitting with a market share below 30% is that the system is very unreliable as a result of continued underinvestment which has eroded our ability to move the maximum capacity. It is the reason why going out to find a partner," she said. 

Mzimela said other options had been looked at before arriving at the plan for a long-term concession. 

"There is no running away [from the fact] that there is a significant amount of investment required. One of the options we looked at was a possibility of a subsidy. But over R9 billion would have been required and at this point in time it was unlikely that support would be forthcoming."

Edited by News24Wire

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