Transnet's Pipeline Project to cost more than Anticipated

Was Peter Bruce of Business Day right when he said we seem not to always get our estimate of infrastructure costs right? Mmm...u decide;

Transnet's new 550km-long fuel pipeline between Durban and Gauteng is expected to cost R23.4 billion, more than double the original estimate of R11.1 billion, the project's director said in Sandton, Johannesburg on Wednesday.

“This pipeline would have cost R23.4 billion (anyway),” said Neville Eve, explaining the factors that contributed to the increase.

These included a change of the Durban site, environmental requirements, changes to engineering and hydraulics and security features.

The additional funds would be raised from the parastatal's own balance sheet, and by issuing bonds on the international market

So, who is going to be the new CEO of Transnet? Or are we going to get another acting CEO?

Acting CEO Chris Wells is out, a day after his boss Barbara Hogan was outsted by President Jacob Zuma for non performance. So we wonder who is going to replace him. This is despite Transnet doing well under his leadership though he was in an acting position, according to media commentators (though there were some bad stories under his belt - think the PRASA Vs Transnet dispute??).

Some long distance trains still not operating

Is it not a shame that PRASA and Transnet has not resolved their dispute as I reported here, and yet the same department responsible for one of the entity wants to introduce a fast train between Durban and Johannesburg. No wonder some people are against the Durban - Johannesburg project.

A blame game while Customers get stranded - PRASA and Transnet.

If you have a family member who relies on Shosholoza Meyl long distance trains, you will be saddened to hear that the Passenger Rail Agency of South Africa (PRASA) has cancelled Shosholoza's services for at least two weeks in order to evaluate its passenger rail corridors to determine which of its routes are viable. The company says that revenues have fallen far short of operating costs, and passenger trains are bedevilled by unreliable locomotives (The Times Live, 14 August 2010).

But the reasons given below where not be the real reason behind the suspension of the services which thousands of people rely on. The real reasons, according to Unions United Transport and Allied Trade Unions (Utatu) was because of a disagreement about train maintenance with Transnet (The Times Live, 14 August 2010). Transnet owns the tracks in which PRASA operates its trains and also maintains PRASA's trains. Ironically, PRASA bought Shosholoza Meyl for R100 from Transnet. PRASA, on its media statement confirmed this dispute which you can read here, though Transnet denies that the withdrawals of train services is related to the maintenance contract.

Even though PRASA assured passengers that they will provide buses to ferry passengers who have paid for their tickets or refund them, I find it hard to believe that they will do this efficiently and not all passengers will receive this information on time which will leave them stranded. This is disturbing, considering that billions of Rands have been wasted on Gautrain while other passenger rail services (e.g. Metrorail) are falling into disarray, despite the latter carrying far more people than the former.

Whether the discussions that are taking place today between PRASA and Transnet are going to bare any fruits remains to be seen, but with both companies belonging to the government departments, it is clear that a political solution is going to be reached. Therefore a long term solution is needed and fast tracking the development of a Rail Policy/Act which will ultimately lead to the setting up of a Rail Economic Regulator. One of the toughest questions that the rail policy needs to answer are as follows;

• Whether it is in the economy's best interest for Transnet to own rail tracks while at the same time operating the business of moving freight;
• To whom will the Gautrain belong to once the PPP agreement with Bombela comes to an end;
• Are PPP rail projects in the future the way to go and if so which passenger agency will be responsible for them (PRASA or Provinces?);and
• The future of rail gauge.

Once this is answered, perhaps we can see a lasting solution that is to the beneficial to the economy. South Africa can not afford the situation that is happening between Transnet and PRASA.