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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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)
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Rail Model Implementation Status
• 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
Spoornet Performance Indicators cont…
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
Spoornet Performance Indicators cont…
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