'Rail sector needs private funding'

2010-10-18 15:30

Johannesburg - SA's rail network will need private investment to run smoothly, Transport Minister Sibusiso Ndebele said on Monday, following recent disruptions in the Passenger Rail Agency of South Africa's long-distance services.

"There is indeed a role for the private sector in the rail sector," Ndebele said in reply to a parliamentary question.

"It is important though to find the appropriate role and balance between the private sector and the state in funding rail passenger transport," he added.

"In fact, rail passenger transport will always require public funding in order to ensure affordability, due to the high cost of rail infrastructure, which the passenger will be unable to afford without some form of government support."

The minister said "key policy interventions" such as effective regulation and upgrading of the rail system would be necessary to make the sector an attractive prospect for private investors.

The minister was responding to a question by the Democratic Alliance on a statement by Shosholoza Meyl, a division of Prasa that operates long-distance services, that it needed R1.4bn per year to run its business effectively, but received only R450m from Prasa.

Ndebele said the funding shortfall was "not a new revelation" and Prasa was seeking to make Shosholoza Meyl's operations more efficient and cost-effective.

Long-distance passengers were left stranded in August when Shosholoza Meyl suspended services as a result of a dispute with Transnet over maintenance work and costs.

Talks between Transnet and Prasa to resolve the dispute are ongoing.

Ndebele said Transnet's claim that the rail operator owes it some R1.3bn was "far from conclusive" and "raises a serious concern" as it had taken months to substantiate its charges.

DA transport spokesperson Manny de Freitas welcomed Ndebele's recognition of the need for private investment in the rail system. He said his party would press for Parliament to draw up "legislation that would detail the partial privatisation of Prasa".

De Freitas urged the government to sell off Shosholoza Meyl and Metrorail.

He said Prasa should, however, retain ownership of the physical components of the rail network and be responsible for maintenance costs, safety and funding capital investment.

  • Phillip - 2010-10-18 16:09

    call up Richard Brandson, he seems to know what he`s doing with his train sets.

  • Johnathan - 2010-10-18 16:23

    How is this possible? The magnificent economic brains of the ANC(YL) tell us that nationalisation is the answer to all problems! It's funny, actually - in a sector like rail, which is generally one where the public sector can efficiently operate, they want private investment, but in a sector like mining, where the state should stay away, they want to get their finger in the pie.

  • Louis - 2010-10-18 16:32

    The private sector will queue to get a chance to run rial services as much as they are queuing to run the SWC stadia

  • eh - 2010-10-18 16:50

    It is amazing that wherever politicians and bureacrats stick their dirty little fingers the wheels come off. Yet they boldly in their ignorance talk about nationalising, more government control etc etc. i think it is time that the Government is privatised....

  • Seamus - 2010-10-18 17:07

    It does not need private funding. It needs private management. Immediately it is privatised, it will become profitable. The same goes for Eskom and all other parastatals. EVERYTHING the ANC touches turns to shite.

  • cr38 - 2010-10-18 17:56

    Where is the taxpayers money going to?

  • Johnathan - 2010-10-19 08:07

    Seamus, you put your finger on it. It does not need private funding, but managers who are not political appointments, but people who actually want to MANAGE the business, not just draw a fat paycheque.

  • Jan - 2010-10-19 09:14

    Everyone should look at Maria Ramos.Ask her how she turned evrything around when she was running the show there. By not investing in infrastructure!! She left it in a shambles! Lets see what happens at ABSA!

  • Nationalisation ! - 2010-10-19 09:21

    The rail network is nationalised but it now needs private funding ! What is the point, as soon as it starts operating effectively again the like of Julius will simply push for nationalisation again and private enterprise gets kicked in the teeth once again. If fraud is reduced by 50% there will be enough funding in the budget to fix the rail network except for the level of management and operational incompetence - this is the crux of the problem which our ineffective education system needs to address !!!

  • Nasdaq7 - 2010-10-19 14:53

    It sounds as if government just can't collect enough in taxes to fund all its business activities and the social grants, free electricity, free homes, free water, free education, free health care... It needs private / foreign investment... Privatization now makes sense doesn't it Malema?

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