Transnet receives R30bn loan from Chinese Bank

Cape Town - State-owned logistics and freight firm Transnet will pocket a R30bn loan from the China Development Bank to improve its ageing train fleet, its acting chief executive said on Thursday.

Siyabonga Gama told a news conference on sidelines of World Economic Forum for Africa in Cape Town that R18bn of the loan amount had already been transferred to the state utility.

South Africa is improving passenger rail services by overhauling its fleet of passenger trains. This is in line with the National Development Plan and the country’s infrastructure investment plan to upgrade key infrastructure.

The upgrades are necessary given the impact the old rail infrastructure has on the daily lives of commuters. Ageing rail infrastructure, insufficient and outdated locomotives lead to low running speeds and an unreliable rail system.

The planned rail upgrades will restore the sector’s safety and reliability, and will not only improve the lives of commuters, but encourage the use of public transport.

Improving rail system

In 2013 a deal worth R51bn was signed to acquire new passenger trains from French company, Alstom. This is among the biggest infrastructure contracts awarded in the country for 600 trains (3600 coaches) over a 10-year period from 2015 to 2025.

Rail infrastructure investment is being prioritised to ensure it becomes the backbone of the country’s passenger transport system. The public transport strategy details the country’s move towards a high quality Integrated Rapid Transport Network, which includes taxis, buses and trains at its heart.

Rail facts

Apartheid's transport legacy

The country’s transport challenges in the rail sector stem from underinvestment during apartheid. Funds for capital improvements in the late 1980s were diverted to prop up the failing apartheid system.

New rail investment was slashed as expenditure on fixed assets fell from R1.4bn in 1986 to R699m in 1988. The lack of investment resulted in a steady deterioration in passenger rail services while freight rail lost market share to road transport.