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Molefe: Transnet break-up needs debate

Johannesburg - The head of South Africa's logistics group Transnet said on Thursday that it was "inappropriate" to speak about a split of the freight rail unit from the group at this time and that the matter needed more debate before a decision is made.

Quoting proposals by the department of tTransport, a media report suggested this week that the freight rail unit may be split away to open the business to the private sector.

"There is a role for the private sector to play ... but not as radical as suggested," chief eExecutive Brian Molefe told journalists.

"It would be disastrous," he told reporters in Johannesburg.

Molefe said that the rail freight business made up more than half of Transnet's business.

"What is really needed at the moment is capital investment and maintenance and we think over the next five years we will make a lot of progress in that and restore the function of the freight business," he said.

Molefe said that the matter needed to be debated in public.

Parliament's transport committee heard this week that Transnet could be stripped of its rail infrastructure assets.

This was based on a proposal by the department of transport to open the rail sector to private investors. The proposal was to be submitted to the national planning commission and adopted by cabinet before it could be implemented, Business Day reported.

This would be aimed at solving the huge investment required to upgrade South Africa's ageing rail infrastructure which sees many companies rather choosing to transport goods via trucks, a more expensive option.

"The road freight sector carries 87% of the total freight in the country," senior transport department official Clement Manyungwana told MPs.

He said the decline in freight rail over the past decade was due to, among other things, a lack of investment in rolling stock, a lack of customer focus, a lack of flexibility and insufficient investment in training, development and staff by the operator.

The plan by the transport department involved setting up a separate state-owned rail infrastructure utility to manage the parastatal's rail infrastructure assets on behalf of the government, and a transport economic regulator to keep playing fields level between Transnet and other rail operators.

Manyungwana told the committee that private companies needed to help run the core railway network.

"Transnet currently has a (capital expenditure) of R110bn over the next five years. The view is, this is not sufficient; let alone the additional funding that is needed for the railway branchline network.

"Outdated technology within the rail network causes us to have continuous challenges (compared to) road. But a lack of customer focus... is one serious, serious challenge that (causes) our rail (freight operations) to decline," said Manyungwana. 

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