[Letter] Transnet: no surprise there were so few takers

With the fundamental barriers that investment would be for a two-year contract period, added to the fact that Transnet Freight Rail (TFR) would remain the custodian (read: owner) of the current infrastructure as well as new capital investments, it should come as little surprise that one company made the shortlist after the TFR’s bid evaluation process (“Transnet fluffs its bid for private partners”, December 1).

The serious amount of capital investment needed to maintain and upgrade the country’s rail will not form if that investment is always subject to the ultimate arbitrary control of the state-owned entity. Furthermore, a contract period of two years means little chance of seeing a meaningful return on investment. If these parameters won’t be let go, at the least it should be for a minimum period of 10 years, and probably substantively longer.

For every day that goes by SA exporters and manufacturers’ growth is inhibited by the sorry state of trade infrastructure. Even assuming the best of intentions behind the current process to bring in private investment, things simply are not progressing quickly enough. The country is falling further behind other emerging markets’ trade output, especially in terms of volumes.

The country’s trade potential is inhibited by the broad decline in quality across the country’s railways and ports. With the world moving into a period of lower growth and sticky inflation, those countries with better trade infrastructure will be less exposed to those additional costs that are part and parcel of inefficient, decrepit trade systems.

Letter originally published here.