Rail Model Implementation

Department of Public Enterprises DATE - April 20, 2023 Page 1

Rail Model Implementation

Presenter: Riad Khan

Venue: Portfolio Committee

Date :11 June 2003

Time : 11h00

Introduction

• The Rail Model • The implementation arrangement• Government Policy and Planning Processes• Rail Model Implementation Status• Spoornet Performance Indicators

The Rail Model

• Process– Task Team– Cabinet Memorandum– Distinction between the two– Tri-partite Structure– Individual Implementation teams

• Luxrail Employment Issues Task Team

• NFA Transport Sector

• Job Loss Mitigation Task Team

• Light and Low Density Line Network Task Team

• Spoornet Restructuring Committee(Sub Committee of the Transnet Restructuring Committee)

The Rail Model cont…

• The Model– Integrated General Freight Business(GFB) and CoalLink– OREX to be shadow incorporated and restructuring

options to be developed– Extended network - 15 800km, that includes a selection of

light density lines– Expanded volumes up to 2020– Operating efficiencies and productivity improvements

supported by the required levels of investment– Investigation of a two-tier management structure for light

and low density line network– Tri-partite Task Team to investigate status of low density

line network– Government to hold Spoornet accountable for

performance and turnaround strategies and projects

The Rail Model cont…

• The Model cont…– Implementation audit mechanism to be implemented by

NFA Transport Sector– 8 000 employer induced retrenchments to be implemented– Tri-partite Job-loss Mitigation Task Team to be established– Appropriate Road to Rail policy initiatives to be developed

and implemented by NDOT– Luxrail to be concessioned– Passenger Rail consolidation to be investigated

The Implementation Arrangement

• Spoornet Tripartite Committee– Decide on implementation teams and areas of

responsibility– Agree Terms of Reference– Agree on processes

• Steering Committees and Task Teams– Government consensus development

• Implementation Teams– Tri-partite consensus on specific restructuring projects

Government Policy and Planning Processes

• Rail Policy• Rail Plan• Integrated Logistics Task Team(Restructuring)• Integrated Freight Logistics Strategy• BEE Coal Export Forum

Rail Model Implementation Status

• Integration of General Freight Business(GFB) and CoalLink– Operations and Management have been integrated 2002– Reporting as an accounting entity within Spoornet 2002/03


• OREX– Discussions were held with Anglo-American on the

optimisation of iron-ore assets and related infrastructure in Northern Cape(commenced June 2002)

– MOU signed in Dec 2002– Anglo-American exits discussions May 2002– Process forward

• Regional Mineral Development strategy to be finalised by DME

• Regional economic development strategies and initiatives to be finalised by DTI and Northern Cape Province

• Restructuring Model development

• Engagement with Labour


• Extended network - 15 800km, that includes a selection of light density lines– Actual retained operational network may be larger,

depending on the outcomes of the regional assessments


• Expanded volumes up to 2020– Volume expansion predicated on recapitalisation

programme– Recapitalisation plan not finalised

• Impact on funding needs of Transnet

• Government assessing medium to long term elements of recapitalisation

– Re-capitalisation dependant on locomotive delivery schedules (2004+)

– Reversal of trend expected post 2004 Net ton kms(mil) Freight net(mil tons)

2000/01 106 786 185

2001/02 105 672 181

2002/3 105 724 179


• Operating efficiencies and productivity improvements supported by the required levels of investment – Investment case being finalised– Low and light density component still being finalised– Operational efficiency elements still being

developed(Labour and Spoornet)– Spoornet Strategy not finalised as yet


• Investigation of a two-tier management structure for light and low density line network – Investigation currently being performed in Light and Low

Density Line Network Task Team(Tri-partite)– Initial structural elements developed

• Ring-fenced entity within Spoornet

• Separate regional strategy and structure

– Business case and regional network components to be finalised

– International Comparative Business Model Study and options being developed


• Tri-partite Task Team to investigate status of low density line network – Currently being performed in Light and Low Density Line

Network Task Team(Tri-partite)– Initial investigations completed– Regional strategies and consultative processes

commenced June 2003– Regional strategy and structure to be developed to

integrate with Local and Provincial Development Strategies and initiatives


• Government to hold Spoornet accountable for performance and turnaround strategies and projects – Spoornet performance monitoring consolidated in

Transnet performance management by DPE– Spoornet operational efficiency monitoring and

performance management being developed alongside recapitalisation plan


• Implementation audit mechanism to be implemented by NFA Transport Sector– NFA Transport Sector has not commenced the

performance audit process as yet, as all parties are awaiting the finalisation of network, operation and financial arrangements

– Model implementation structures are functioning and no significant dissatisfaction exists with processes and outcomes

– Slow progress on all processes is major concern for Government


• 8 000 employer induced retrenchments to be implemented to 2006– Process awaited the establishment of the Transnet

Restructuring Committee and the establishment of the Spoornet Restructuring Sub-committee

– Reluctance to accelerate retrenchments till finalised structures and operations

– Awaiting finalisation of Job-loss Mitigation Process


• Tri-partite Job-loss Mitigation Task Team to be established – Task Team is operational– Team is developing methodologies and structures to

ensure maximum mitigation– Integration with Transnet wide processes being developed

(Transnet Social Plan)


• Appropriate Road to Rail policy initiatives to be developed and implemented by NDOT – NDOT developing a range of these initiatives and are

contextualising these in the Rail Policy and Planning processes eg.

• Investigating impact of GVM on road maintenance costs

• Raising institutional capability to enforce existing regulation

– NDOT driving the integration of Provincial development and transport policy and planning with the Road to Rail initiatives


• Luxrail to be concessioned – Concessioning process was at advanced stage prior to fire

that destroyed portion of one train set– Interest in the concession was registered by international

hotel and rail companies– Three weeks away from public announcements when

suspended– Currently awaiting Transnet decision on timing of

refurbishment so as to commence revised financial modelling and due diligence

– Agreement reached with Labour on employee issues, awaiting signature of Transnet


• Passenger Rail consolidation to be investigated – Inter-governmental task team investigated consolidation

and developed consolidation options– Outstanding institutional elements have been referred to

Principals for resolution– Main issues identified:

• Capital subsidy for backlog reversal to be finalised and approval sought

• Operational optimisation to be developed with Provincial and Local Transport Authorities

• Operational subsidy to be finalised and approval sought

Spoornet Performance Indicators

2000/01 2001/02 2002/03

Diesel Locos 1128 1149 1180

Average age 23 years

Utilisation 89% 87% 84%

Electric Locos

1674 1675 1729

Average age 25.6 years

Utilisation 82% 78.8% 78.4%

Combined loco availability

98% 101%

Maintenance cost per loco

R 325 800 R 369 900

Capex per loco

R 141 000 R 180 000

Spoornet Performance Indicators cont…

2000/01 2001/02 2002/03

Ave rev per loco

R 3 295 582 R 3 306 758 R 3 632 931

Wagons 94 670 91 574 84 160

Ave age 27 years

Availability 108% 108%

Turnaround time

11.2 days 10.9 days 10 days

Route km 18 432km 18 432km 18 432km

Speed restrictions on

349km 374km 469km


2000/01 2001/02 2002/03

Employees 36 148 34 344 34 662

Employee per line km GFB

1.80 1.71 1.73

Redundant employees

171

Net ton km per Employee Total

2 954 133 3 076 869 3 050 141

Net ton km 106 786 mil 105 672 mil 105 724 mil

Net freight mass

185 mil 181 mil 179 mil

Rev per employee

R 293 018 R 325 617 R 338 642


2000/01 2001/02 2002/03

Profit per emp R 17 733 R 38 522 R 32 197

Net ton km per wagon

1.13 mil 1.15 mil 1.26 mil

Net ton km per loco

38.1 mil 37.4 mil 36.3 mil

Capex as % of expenditure

9.67% 11.27% 11.03%

Capex as % of asset base

7.26% 8.13% 8.29%

BEE expenditure

R 197 mil R 412 mil R 458 mil

Shosholoza Meyl Performance Indicators

2000/01 2001/02 2002/03

Number of passengers

4 218 023 3 601 722 3 370 164

Rev per passenger

R 60 R 74 R 79

Op cost per passenger

R 103 R 129 R 134

Documents

Rail Model Implementation