Transitioning SA's Petrochemical Value Chain

Rail transport is a lower greenhouse gas emissions mode of transport than road, when measured on a per tonne and per passenger-kilometer basis. In addition to saving freight transport emissions, an efficient rail system could have other benefits for South Africa including improved accessibility and affordability for passengers who rely on other public transport, including minibus taxis; lower costs for long-distance transport of consumer goods; alleviation of pressures on the crumbling road system; and improved road safety.

Rail once played a pivotal role in South Africa’s economic development, opening up rural areas to agriculture and mining, and connecting them to major cities of Johannesburg, Cape Town and Durban and associated ports. The country’s current rail network is 30 400 track-km long, comprising of a national network connecting the three major cities, branch lines to smaller cities, towns and rural areas, and a rapid transport network in Gauteng. The principal transport assets such as the freight rail and national port assets are owned and operated by Transnet SOC Ltd., while passenger rail services are operated by Passenger Rail Agency of South Africa (PRASA).

Recognising the benefits of rail, the world’s railway industry has been reinventing itself, and by 2050 many governments are anticipated to depend on rail to help meet commitments to reduce greenhouse emissions. In South Africa, however, the sector has experienced a significant decline for several decades, losing virtually all its branch line traffic, long distance passenger traffic, and market share in general freight and commuter rail.

One of the challenges is that rail has largely operated without a foregrounding and cohesive national policy over the past century. As other competing transport modes emerged, public funding for rail declined substantially and with it, declining policy support, including through deregulation of road transport in 1988. The freight and passenger rail markets are monopolistic, and both are inadequately funded and managed. Massive capital investment backlog has resulted in ageing infrastructure, outdated technologies, and a lack of specialised technical skills. This has restricted the freight market share to less than 20% for general freight and commuter trains to servicing less than 10% of passenger travel in the country.

Despite the potential emissions savings and other benefits, there are currently no government incentives to shift from road to rail. Because of the existing monopolistic rail freight market structure, Transnet is not incentivised to implement actions to help stimulate a modal shift. Having said this, the National Rail Policy White Paper gazetted in March 2022 aims to reinvigorate Government’s intentions to realise a ‘rail renaissance in the country”. Key interventions include enabling large investments into heavy freight haulage and contemporary urban and regional rapid transit.

Developing new rail infrastructure to support significant modal shifts requires substantial investment, with one estimate suggesting R 300 billion is required to expand rail along major corridors.