Introduction
Good afternoon to you all and thank you for joining us at this media briefing on South Africa’s Rail Investment Programme.
As you are aware, Transport Minister Sibusiso Ndebele, during President JacobZuma's State Visit to China last week (24 - 26 August 2010), signed a Memorandum of Understanding (MoU) on railways and other transport-related matters with his Chinese counterpart Minister of Railways Mr. LiuZhijun.
The MoU recognises the significant economic challenges and opportunities arising out of and consequential to relations between South Africa and China. It takes into consideration the framework of the New Partnership for Africa's Development (Nepad) and the Forum on China-Africa Co-operation (FOCAC).
The MoU recognises the need to find new approaches for consolidating, expanding and deepening rapid developments in the transport sector between South Africa and China. It aims at mutually beneficial cooperation with specific focus on empowerment that seeks to implement world-class projects on a win-win basis. It further seeks to promote investments, industry, trade and co-operation between South Africa and China in the area of rail.
South Africa’s rail network
South Africa has a wide rail network shaped by our economic and social history. This network requires massive rehabilitation and modernisation.
Also, due to an emerging post-apartheid economic and spatial architecture, there are demands for new and additional passenger and freight corridors. These new corridors require balanced investment in rail and other modes of transport.
Our starting point is that the passenger rail sector requires balancing investment between refurbishing existing stock, acquisition of new stock and the construction of new corridors.
A Detailed Investment Programme of Action, with streamlined work-streams for each of the proposed passenger rail projects, has been finalised.
Parallel to this, we have a Programme of Action on related regulatory, institutional and funding requirements:
- The finalisation of a Rail Policy and Rail Act; and
- The establishment of a Rail Economic Regulator which will be tasked with the development of a standardised tariff regime.
These processes will be completed by the end of the 2011/12 financial year.
Comprehensive rail investment programme for South Africa
As the national Department of Transport, we are working towards a comprehensive Rail Investment Programme for South Africa.Within the programme, catalytic projects have been identified. This is our initial work-in-progress briefing. We intend to continue engaging the media on progress we are making after each milestone achieved. These projects range between concepts for some and detailed plans for others.
Let me state at the outset that we are planning to ramp our investment activities within the passenger rail sector in South Africa. This does not suggest that we will be neglecting our activities in other modes of public transport.
We are adopting an approach which suggests a sequenced delivery process for the rail sector over a 20-year period. Our view is that the rail sector should be one of the major investment areas for the transport sector and the economy of South Africa.
Through South Africa’s National Transport Master Plan (NATMAP), we have identified three high-speed rail projects – Johannesburg to Durban, Johannesburg to Cape Town and Johannesburg to Musina.
Our agency, the Passenger Rail Agency of South Africa (PRASA), identified the need for the re-capitalisation of their fleet over the next 18 years.
Jointly with the provincial governments of Gauteng and Mpumalanga, we have identified the need for a commuter rail corridor between Tshwane and Moloto.
We are preparing to submit to Cabinet Action Plans for these projects.
1. High speed rail projects
We will first conduct the necessary feasibility studies for the high speed rail projects. We will start with the Durban-Johannesburg project. As of October 2010, a team will start with the dual process of concept development and testing the market for a period of six months. We are hoping that at the end of this process, we will be able to determine whether there is enough appetite for this project in the market. The initial scoping suggests that it is possible for this project to be commercially-driven based on a Public-Private-Partnership model. There are also possibilities for country-to-country co-operation.
2. Acquisition of rolling stock - PRASA
The Department of Transport in conjunction with the Passenger Rail Agency of South Africa (PRASA) has conducted a due diligence with detailed costs for the acquisition of new stock for the entire commuter rail system in South Africa. During this month (September 2010), we will be approaching Cabinet for authorisation of this investment programme. Key to the programme is funding as well as identification of technology partners. We are planning to go to the market next year. This is an 18-year programme.
3. Moloto Rail Project
The Moloto long-distance commuter service is presently operated mainly by a contracted bus service, with an additional few commercial bus and taxi services. We are presently looking at various options.Within transport, we are convinced that a rail service is the best option.
It is our considered view that these projects and Transnet rail upgrades will be a major boost to the socio-economic development of our country.
South Africa–China Memorandum of Understanding
Due to incorrect perceptions created through the media, it is important that we deal with the Memorandum of Understanding signed with the Chinese Government during the State Visit last week.
The following four main pillars are of critical importance:
- improvements of our urban, rural and long distance transit infrastructure and systems;
- leveraging of local and global funding and transport technologies through strategic partnerships and alliances;
- development of local industries through these sequenced transport delivery processes; and
- building institutional, regulatory and project management capacity within the sector.
The Memorandum of Understanding with the Chinese government should therefore be located within this context. It is not project-specific but a pronouncement by the Chinese government that they would like to participate as one of the global strategic partners in our rail renaissance. There are similar engagements with other rail countries.
We are looking at different country to country partnership options. They can either be through:
- a Foreign Direct Investment within the rail sector;
- technology transfers;
- funding; and
- skills development.
We will be working on the partnership with the Chinese government through a Joint Working Group established and chaired by the Directors-General of the two countries. The Working Group will have to complete its work and report to the respective Ministers of Transport and Rail by November this year.
As part of this process, we are planning to invite other potential partners and countries during an investor conference to take place during October Transport Month. We are presently working on the details of this conference.
Sustaining rail investments in South Africa
Over the past five years, we have invested over R40 billion in passenger rail infrastructure and services in South Africa. This involved R25 billion in the Gautrain project and almost R13 billion on rehabilitating PRASA coaches and signalling systems.
The challenge we are facing is that most of our commuter rail system has reached the end of its lifespan. We believe that an ambitious programme of introducing new rail stock and technology in our system is an absolute necessity and will protect our historical investment in the sector.
There are major socio-economic spin-offs from a comprehensive rail investment programme. A sustained programme over a 20-year period will create certainty and will enable input manufacturers to re-tool their factories and therefore create sustained local industrial activities.
Part of this process is to identify critical inputs and identify through a cost-benefit analysis those we can develop locally, based on our competitive advantage and creation of local economies of scale. This is important for creation of sustainable jobs and the growth of our economy. We are still working on the details. We are presenting these issues to spark a national debate.
We therefore see this programme not only developing mass transit systems but also as central to the economic development of our country.
It is important to emphasise that there is engagement with Transnet so that this programme is linked to their ramped-up investment in the rail freight sector.
Global surge in rail investments
This programme is developed within the context of a rail renaissance taking place globally. We want to be part of this global revolution.
It is generally agreed that new rail technology generates social benefits, which stem from savings, increase in reliability, comfort and safety, as well as from the reduction of congestion and accidents in alternative modes. It is the most environmentally-friendly mode of transport.
This renaissance is due to rapid urban migration, economic development of the Asian tigers and the emergence of mega-cities resulting in long-distance commuting on a daily basis.
Public transport systems such as Bus Rapid Transit (BRT) Systems can absorb a certain commuter threshold. Beyond that the most logical mass-mover is rail.
We are witnessing cities in emerging economic powerhouses including Beijing, Shanghai, Seoul and Taiwan in Asia and Croatia, Poland and Russia in Eastern Europe joining countries in developing high speed rail over the past ten years.
Rail technology has evolved over the past half a century since the first speed train in Japan. It is our view that the technology revolution that has taken place in mass mover systems must be exploited without massive investments in local Research and Development. What is required of us is adaptation for our country.
South African transport infrastructure investment template
To tackle this challenge, we are developing a development template which has four defined outcomes.
- urban transit systems;
- long distance transit systems;
- key strategic freight corridors; and
- rural access and mobility.
Rail investment is part of a broader transport development package. For each of these outcomes, we are finalising detailed work-streams with outputs and deadlines. Today we are not dealing with the key strategic freight corridors and rural access and mobility.
Urban transit systems
We have made major advances over the past few years in developing our urban transit systems, particularly in 2010 World Cup host cities such as Johannesburg, Cape Town and so on. There have been developments of both our rail and bus sectors. These cities continue to work hard addressing infrastructure and service integration challenges.
We are working with them to consolidate three critical areas:
- origin-corridor-destination infrastructure (interchanges and dedicated lanes);
- bus-taxi-rail service integration; and
- building capacity to better regulate the system.
Through engagement with them, we are continuing to investigate gaps in their commuter systems for improvement.
We are confronting the challenge of building local metros and districts to manage their local transit systems.
We are planning to have fully-integrated transit systems in 12 urban centres and 6 rural districts by 2020.
In Johannesburg, Cape Town, Durban and Tshwane commuter rail will be the backbone of their transit systems.
Long distance transit challenges
With regard to long distance transit systems, we are faced with three major challenges:
- To support tourism services between our major economic hubs, such as Johannesburg-Durban.
- Inherited migrant labour system. We are still having massive worker movements every weekend between cities and rural areas.
- To support the emergence of ‘mega-city’ dynamics, such as Johannesburg-Tshwane, Durban and Pietermaritzburg.
These challenges can only be addressed through rapid rail systems. We are seeing a massive increase in long-distance travel in South Africa.
The bus and taxi sectors have overtaken the rail sector over the past 20 years. Low cost airlines have also entered the market without any serious impact. The cost structures are putting a strain on bus and taxi revenue streams. The system requires a mass-mover and that is the rail sector.
In the South African context, we have a specific challenge with regard to the movement of workers between Tshwane and KwaNdebele. Workers travel for 120 to 180 kilometres single journey trips at an average cost of R7 500 per passenger per month. This is costing R350 million per year on state subsidies. This has increased by 100% over the past 10 years. This is clearly not sustainable.
Conclusion
Today’s media briefing is therefore not the launch of a project, but the beginning of a long process of developing a sector which we believe has the potential of being a net contributor to the economic development of our country and a major improvement to the mobility of our communities.
We are outlining a process rather an event.
There are obviously certain milestones.
1. Submission of the plans to Cabinet by the end of September this year.
2. The convening of the Investor conference to broaden the development of local and international partnerships
3. The completion of the Concept framework for the Johannesburg-Durban speed rail by the end of the current financial year (March 2011).
4. Agreements on the Acquisition of the Rolling Stock by the end of June 2011.
5. The finalisation of the Rail Act and the establishment of the Rail Economic Regulator by the end of the 2011/12 financial year.
As Minister Ndebele said: "We are characterised as a developing country. We ask the question how long are we going to be developing, when are we to become a developed country? Rail, we are certain, is one way in which transport will bring loved ones together and bring families together. It will help us move South Africa from being a developing country to being a developed country by transporting people and goods efficiently, effectively and with the least cost to our environment and economy.”
Enquiries:
Sam Monareng
Cell: 083 326 1521
