S.Africa Transnet says proposed split needs debate

Thu Aug 25, 2011

JOHANNESBURG Aug 25 (Reuters) - 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 Transport, a media report suggested this week that the freight rail unit may be split away to open the business to the private sector.

State-owned Transnet has a monopoly over South Africa's rail network. Coal miners have complained that they were unable to export all of their coal due to bottlenecks and derailments on the lines leading to the export terminal at Richards Bay.

Producers have said they were willing to pitch in to improve capacity, but extensive private-public partnerships have yet to materialise.

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

"Structural separations need to be treated with caution."

Transnet is investing heavily to boost volumes on the coal export line to 81 million tonnes by 2015. The group is also studying the option of freeing up some 14 million tonnes of capacity on the coal line in two to three years by moving non-coal cargo to a new line via Swaziland.

Molefe said the rail unit was hit by two decades of underinvestment but recent ventures had been paying off.

"Over the next five years we will make a lot of progress and we think that we can restore the functioning of the freight rail business," he said.

Producers have already complimented Transnet on improving efficiencies on the line. Molefe said the line was currently transporting up to 1.6 million tonnes of coal a week.

Minister of Public Enterprises Malusi Gigaba, under whose mandate Transnet falls, said in a separate briefing that there was no discussion of splitting the rail unit away.

"There is no such thing. Neither the minister of transport nor the minister of public enterprises are aware of this. This was just a junior official who made an unmandated statement which has no standing in either of the two departments," he told reporters in Cape Town.