A presentation by Ms Hlengiwe Sayd (Director: Rail Policy and Strategy Development: DOT) at the Transport Forum Month of Transport Celebrations 1 October 2015 hosted by University of Johannesburg. The theme for the event was: "Trends in Policy Development for Transport" and the topic for the presentation was: "The Green Paper on National Rail Policy." More like this on www.transportworldafrica.co.za

1. National Rail Policy Green Paper Presentation
Transport Forum
01 October 2015 Hlengiwe Sayd

2. 2
Overview
• Railways in South Africa
have lagged increasingly far behind railways that have participated in railway renaissance,
due to several challenges and historic events, to the point where they are:
– no longer able to compete effectively against other transport modes
in capturing their proper share of the national freight and passenger transport task; and
– unable to support South Africa’s exports into global markets
• Lack of policy direction and appropriate institutional frameworks
as well as lack of a strategic approach to major new rail investment decisions
have exacerbated the situation
• A National Rail Policy is required to steer the various role players towards
consistent strategic reform to ensure future sustainable development
of the rail industry over a realistic time period and in an affordable manner
The National Development Plan identifies outdated, malfunction-prone railway technology
as straining the road network and calls for focus on total transport system efficiency
to maximise the strengths of the different modes, cut inefficiencies and reduce disparities:
The policy positions put forward in the Green Paper are directly aligned to this vision

3. 3
Market and Institutional History
Above rail
Below rail
Vertically
Integrated
Vertically
Integrated
Horizontally
Separated
&
Vertically Separated
(Commuter Network)
Preparation for
Vertical Separation
Vertically
Separated
Horizontal
Separation
(Freight &
Passengers)
& Vertical
Integration
(Passengers)
1910 1981 1990 1994 1996 2009
Spoornet Spoornet Spoornet TFR PRASA
SA Railways
& Harbours
SA Transport
Services
All services integrated
under Spoornet, freight
and passenger
separated.
Orex
Metrorail
MLPS
BlueTrain
Orex
MLPS
BlueTrain
Metrorail
Blue
Train
GFB
CoalLink CoalLink
Coal & Iron
into regional
structures
Metro
GFB GFB
Shozoloza Meyl
SARCC
Metro
Network
SARCC
Metro
Network
SARCC
Metro
Network
SARCC
Metro
Network
Minister of
Transport
Commercialisation
Integrated Port &
Railway run along
Commercial lines
Corporatisation
Transnet & SARCC follow
from the Legal Succession
Act
Transportation
Conglomerate
Restructuring 1
Spoornet closed regions
in favour of Central
Planning & 35 Areas
(Customer Service &
Ops); ring fence Metro &
MLPS & Blue Train
Restructuring 2
SARCC concessions
Metrorail services to
Spoornet
Restructuring 3
TFR
disposes of Metrorail
and
Shozoloza Meyl to
PRASA

4. Rail Challenges in South Africa

5. 5
Rail Challenges
• Under-utilised infrastructure assets
– Difficult terrain, tight curves and steep gradients
– Investment in other modes vs piecemeal upgrading in rail resulting in technical
inconsistencies
– Limitations of narrow gauge, re speed
• Over-age equipment
– Metrorail & Shosholoza Meyl designs dated from 1950s & 1960s
– Tendency to refurbish assets to existing standards instead of upgrading
equipment
– Outdated signalling and train braking technologies, compromising safety
• Capitalised maintenance
– Significant capital spent on maintenance
• The status quo is unsustainable
– Narrow gauge precludes the implementation of full strength heavy haul &
Double stacking containers.

6. 6
Rail challenges
Low performance
• Railway costs include a relatively high infrastructure fixed cost component: Rail is:
• More cost effective when traffic volume increases for given route distance, and
• Less cost effective when traffic volume decreases for given route distance
• Whether general freight or heavy haul in Brazil or in South Africa,
narrow gauge does not cut it, and more incisive interventions are necessary
Raising availability
and reliability is
always necessary,
but an increase
from
70% (mediocre)
to 90% (good)
cannot raise
performance
sufficiently to
move SA railways
into the league of
its Assertive
Railways cluster
fellows
Reduction of SA
network by ⅔
without material
loss of traffic
would:
Go a long way to
increasing TFR
line density to that
of its BRIC
fellows; and
Usefully reduce
the infrastructure
fixed cost
component
Operation
Track
Gauge
Freight
Traffic
Category
Density106
tonne-km
per route km
Density 106
passenger-km
per route km
Brazil: MRS Broad
All
Freight
37.2
China Railways Standard 26.9 8.9
Russian Railways Broad 23.6 1.8
USA: BNSF Standard 20.3
USA: Union Pacific Standard 16.0
USA: CSX Standard 12.4
Indian Railways Broad 10.9 16.6
USA: Norfolk Southern Standard 8.3
South Africa: TFR Narrow 7.4 0.1
Australia: BHP Billiton Standard
Heavy
Haul
126
Brazil: EFC Broad 82.3
Brazil: EFVM Narrow 79.6
South Africa: TFR Ore Line Narrow 58.1
South Africa: TFR Coal Line Narrow 37.5
South Africa: TFR Narrow General
Freight
4.3
Brazil: ALL, FCA, Transnordestina Narrow 1.2

7. 7
Rail challenges cont.
• Branch lines
– 50% closed & not economically viable
• Institutional arrangements
– Bodies other than govt developing & implementing strategies & policies
– No clarity of roles & responsibilities
• Rail Transport planning
– No coordination nor integrated planning
• Economic regulation
– New market entrants subjected to non-transparent SOE practices
– SOE self-regulate in their favour – fares, tariffs, network access, etc.
• Skills development and job creation
– Skills lost with the decline in rail; inadequate critical skills; training facilities
• Rail safety & security management
– Vandalism, theft, insufficient security, informal settlements
• Lack of Funding

8. The Railway Renaissance

9. 9
Rail’s Genetic Technologies:
• Supporting achieves heavy axle load
• Guiding achieves high speed
• Coupling unitises vehicles into trains
and leverages Supporting and Guiding
to scale capacity to meet demand—
freight and/or passenger
Inherent railway competitiveness

10. 10
Inherent railway competitiveness
(continued)
Railway Genetic Technologies and Competitive Market Spaces
1960’s – Commercial high speed
intercity passenger trains.
1970’s – Heavy haul unit trains
conveying bulk commodities.
1980’s – Double stack container
trains.
1990’s – Rapid growth of urban
commuter rail.

11. 11
Rail’s Rise and Fall and Rise Again
0
20
40
60
80
100
120
1800 1850 1900 1950 2000 2050
Early Adoption
Maturity
Motorways
Technology
Limits
Alternative
Technologies
Terminal Decline
-10
1800
1964
-10
1800
-10
1800
Hi-speed Intercity
1972
-10
1800
Heavy HaulHeavy IntermodalUrban Rail
1980
1989

12. 12
Rail challenges
Lessons learned (1 of 4)
Attribute Brazil Russia India China South Africa
Governing
Ministry(ies)
Ministry of
Transport
Ministry of
Transport
Indian Railway
Board
Ministry of
Transportation
Department of
Transport plus
Department of
Public Enterprises
Intermediary
Institutions
National Land
Transport Agency
and
VALEC
Engineering,
Construction &
Railroad Inc. (SOE)
Federal Agency
for Rail Transport
None State Railways
Administration
plus Hong
KongTransport
Department
None
Operators 12 Vertically
integrated
concessionaires
on existing
infrastructure;
open access train
operators on new
infrastructure
Russian Railways
17 Regions; plus
Russian High-
Speed Railway Co;
Federal Passenger
Co; Freight One;
Globaltrans;
JSC High Speed
Rail Lines;
plus 160 other
subsidiaries.
15 Zonal Railways
plus Dedicated
Freight Corridor
Corp of India Ltd
(SPV); High Speed
Rail Corp of India
Ltd; Konkan
Railway; National
Capital Region
Transport
Corporation Ltd;
plus 9 other PPPs
China Railways
Corporation
plus
MTR Corporation
(Hong Kong)
plus ≈26 local- and
joint venture
railways
Rail freight SOE
plus
Passenger Rail
Agency
plus
Bombela
Concession Co.

13. 13
Rail challenges
Lessons learned (2 of 4)
Attribute Brazil Russia India China South Africa
Investment
Funding Sources
Federal
Government,
Regional
Government,
State Owned
Enterprise,
Private Sector
Participation
Federal
Government,
Regional
Government,
State-owned
Enterprise,
Private Sector
Participation,
Capital Markets
Union
Government,
State
Government,
State Owned
Enterprise,
Private Sector
Participation,
World Bank,
Foreign Direct
Investment
National
Government,
Regional
Government,
State-owned
Enterprise,
Private Sector
Participation,
Capital Markets
Freight: State-
owned Enterprise
plus Capital
Markets;
Passenger:
National
Government
Renaissance
Achievements
High Speed,
Heavy Haul,
Long Stacks,
Urban Rail
High Speed,
Heavy Haul, Double
Stacks, Urban Rail
High Speed,
Heavy Haul, Double
Stacks, Urban Rail
High Speed,
Heavy Haul,
Double stacks,
Urban Rail
High Speed,
Heavy Haul,
Double Stacks,
Urban Rail
Market Structure Existing network
Vertically
Integrated;
New network
Vertically
Separated
Vertically Integrated Vertically
Integrated,
Vertical Separation
under consideration
Vertically Integrated Vertically Integrated

14. 14
Rail challenges
Lessons learned (3 of 4)
Attribute Brazil Russia India China South Africa
3rd Party Access Sole
Concessionaire
on existing lines;
Open Access
on new lines
Negotiated Currently Closed Closed Limited negotiated
Strategic Horizon
for railway
networking
Occupies half of
South American
continent, currently
extending railway
coverage to access
its entire territory
East Asia–Western
Europe Corridor,
Russia–India
Corridor, and North
America
North–South
Russia-India
Corridor
Developmental
Railway Corridors
to Africa, Asian
neighbours,
Europe, and North
America
North-South
Corridor,
Heavy Hauls,
General Freight
Corridors,
Branchlines
Track Gauge, mm Heritage lines 1000
and ≥1435, new
lines ≥1435
≥1435 ≥1435 ≥1435 1067

15. 15
Rail challenges
Lessons learned (4 of 4)
Attribute Brazil Russia India China South Africa
Overall Line
Density, line
density units
37.2 25.4 27.5 35.8 7.5
All Freight Line
Density, tonne-
km/route km
37.2 23.6 10.9 26.9 7.4
Line Density,
passenger-
km/route km
0 1.8 16.6 8.9 0.1
Heavy Haul Line
Density, tonne-
km/route km
82.3 No information
available
No information
available
400 58.1

16. Recommended Policy Positions

17. 17
Government recognises the urgent need for rail revitalisation through centralised
rail planning, investment strategy and decision making which will be driven by the
Department of Transport.
Infrastructure & Track Gauge
• Investment is geared for a move towards standard gauge infrastructure on
a high performance core network stimulating railway renaissance in Heavy
Haul, High-speed Intercity, Double Stacking, and contemporary Urban Rail.
• Urban rail & narrow gauge – where appropriate, for urban rail, the existing
network will continue to be used, will be suitably maintained and extended
where justified. The rest of the narrow gauge network will either be exploited
where required or be disposed of.
• Timing – The timing of gauge change would be informed by demand and
capacity requirements, and is to be determined on a case by case. Feasibility
studies will confirm appropriate gauge.
Recommended policy position
Investment

18. 18
Recommended policy position
Funding & Private Sector Participation
FUNDING
a) The fiscus or through instruments secured via Government Guarantee – PRASA
b) Financial instruments secured by the Balance Sheet of a SOC – TFR
c) Debt and Equity financing
d) Private Sector Participation, where the private sector are willing to fund and bear
the risk. Potential private sector funding models include:
– Private involvement in operations or the provision of assets such as rolling
stock
– Public Private Partnerships (Gautrain)
– Leveraging the commercial value of railway land and the development
opportunities around stations
PRIVATE SECTOR PARTICIPATION
• Government will invite private sector participation to invest in projects
where it cannot presently afford to invest, or where value for money can
be demonstrated for a private sector risk premium.

19. 19
Recommended policy position
Funding & Private Sector Participation cont.
Branch lines
• Branch lines are to be categorized as Strategic or Non-Strategic.
• Criteria for Strategic branch lines include the following: food security,
developmental infrastructure, upliftment of rural communities, amongst
others.
• Strategic - Vertically separated concessions
• Non-strategic - Vertically integrated concessions
• Financially non-viable branch lines categorized as Strategic should be
subsidised by Government.
• Non-strategic economically viable or marginal branch lines that TFR
chooses not to operate are to be concessioned at government discretion.
• Government, through its SOC’s and Agencies, will retain ultimate
ownership of all below-rail infrastructure assets.

20. 20
Recommended policy position
Centralised rail transport planning
DOT to develop
Centralise and
Coordinate all
rail planning
Legislation enabling the National Rail
Policy - will give effect to these plans
Submissions from
stakeholders
NRMP must be a mechanism to implement revitalisation investment led
interventions.
Define investment strategy required
to revitalise rail - build a new
standard gauge core network for
general freight and passenger
services
Determine funding required, funding
sources and its application
Planning and
communication between
all relevant bodies to be
co-ordinated by DOT
Planning must
consider
interoperability
issues with
neighbouring
countries –
revitalisation must
not be at the
expense of the
region

21. 21
Recommended policy position
Rail Economic Regulation
• Government recognises that economic regulation is required to ensure fairness, competition,
and long-term sustainability in the rail sector.
• A Rail Economic Regulator (RER) will be established to:
• Promote equity of access to rail infrastructure and services, as well as to investment
opportunities where relevant;
• Ensure reasonable access and fair pricing to train operators and concessionaires;
• Regulate market entry and exit and service levels;
• Resolve commercial disputes;
• Determine fair and reasonable tariffs for using rail infrastructure and services, which will
inform the approval of tariff requests received from the respective entities.
• RER will be included in the Single Transport Economic Regulator (STER).
• Until RER is established: Interim Railway Economic Regulatory Capacity (IRERC).
• Purpose of the IRERC: Gain better understanding of industry / economic regulatory
practices, establish consultation structures, address capacity constraints.

22. 22
Recommended policy position
Institutional arrangements
Role of National Government
• DOT is responsible for policy formulation, co-ordination of policy implementation, strategic planning, leadership and all
decisions relating to rail revitalisation
• DPE is responsible for overall governance and oversight to ensure that Transnet effectively fulfils its mandate as
envisioned by revitalisation interventions .
Role of Provincial Governments
• Formulation of provincial transport policy and strategy; and Planning and co-ordination of land transport functions
• For rail : Critical that Provincial Governments align their plans with objectives and sequencing of the interventions
in National Rail Policy and the associated plans and strategies developed by DOT
Role of Local Governments
• Per the NLTA, land transport functions are to be assigned to the most appropriate sphere of government –
many Local Governments do not have the required capacity
• PRASA continues to operate urban commuter rail - SLA’s : DOT / PRASA.
Role of Operators / Infrastructure Owners
• Freight rail: Exclusively operated by TFR on vertically integrated basis – except where private sector is invited to
participate (branch lines and other) through exclusively private operators or a combination of TFR / private operators
operated where .
• Passenger rail: Commuter rail and long distance passenger rail - operated by PRASA.

23. 23
Recommended policy position
Skills development and job creation
• A competitive, revitalised rail industry will set the stage
to attract potential job seekers.
• Government recognises the need for revised and up-to-date training
programmes that would address the requirements of the revitalised
rail industry.
• Current training techniques, curriculum material and learning aids
will be reviewed to identify and address training inadequacies.

24. 24
Recommended policy position
Safety and security
• Rail safety & security will form an integral part of rail revitalisation.
• The RSR will continue performing its function in ensuring railway
safety.
• The SAPS Protection and Security Services Division (Railway
Police) will continue to be responsible for law enforcement within
the rail environment.
• Operator-owned or outsourced security services will do first line
defence to protect passengers, personnel and assets, and manage
safety and security in the rail setting.

25. 25
Way forward
• Green Paper published on the Government Gazette &
Departmental website
• Written comments and inputs to be provided within 60 days
post publication
• Provincial consultations
• Draft the White Paper on National Rail Policy

26. Thank You