Government is working on an agreement to house the Private Sector Participation Unit within the Development Bank of South Africa.
The private sector has welcomed the Department of Transport’s next step for private rail operators: its Interim Private Sector Participation Unit issuing three Requests for Information. The department will use the information gathered to facilitate participation, such as investment and concessions.
The Private Sector Participation (PSP) Unit was conceptualised in the Rail Private Sector Participation Framework that cabinet adopted in December 2023 and started work focusing on identifying, coordinating and directing much-needed capital investments and expertise by the private sector in critical rail and port projects.
Ian Bird, senior executive in the transport and logistics focal area at Business for South Africa (B4SA), says the Requests for Information (RFIs) are the next major step in the structural reform process to secure significant private sector participation.
“This will go beyond just access to slots on the rail network for private rail operators, as set out in the recently released Network Statement. Participation is likely to take many different forms, including investment, concessions and more, and will be guided by responses to the detailed questionnaire in the RFIs.”
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Potential private sector participants’ information
The RFI process facilitates the department’s collection of information from potential private sector participants on possible projects and concession-type models, which is then used to properly inform the next step in the process, which is the Request for Proposals (RFPs).
The information collection is scheduled to take place over approximately seven weeks, concluding on 9 May. The PSP Unit will then carefully analyse all responses, share feedback with the market and begin the development of the RFPs, which are anticipated to be issued to the market by the end of August 2025.
“We strongly encourage all interested and affected parties to take this opportunity to respond to the RFIs so that the PSP Unit has the highest quality data and information available to produce robust and appropriate RFPs,” Bird says.
“While this is an important step forward in the process, we recognise that this will not have an immediate impact on operational efficiencies. The appropriate governance and legal frameworks must be in place for these partnerships, and significant work will probably be needed on infrastructure upgrades and equipment maintenance before any concessionaires can start operating effectively.
“The implication is that this will require a substantial step up in investment levels, which will depend on the necessary conditions being in place to facilitate this.”
The PSP Unit previously indicated that the timeline to commercial close could take up to two and a half years.
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SA has good track record of private-sector participation
Bird points out that South Africa has a good track record of private-public partnerships, with some of the largest in the country’s transport and energy sectors, which should assist in bolstering the confidence of potential investors and attract investment of expertise and capital that will revitalise the country’s rail and port sectors.
Minister of Transport Barbara Creecy announced the RFIs on the weekend and said that the limited availability of state resources to fund infrastructure development and address backlogs intensified the challenges for the rail system, severely restricting the ability of state-owned entities to fulfil their critical mandates.
She said government and Transnet received numerous unsolicited proposals from the private sector offering investment, skills and expertise to support the rehabilitation and reform of the country’s struggling rail and port systems.
“This overwhelming interest made it clear that the department and Transnet must engage in broad and inclusive market engagement before issuing Requests for Proposals (RFPs) in August this year. These are not formal procurement processes in themselves, but a mechanism to understand and source information from the market.”
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Three corridors for private sector participation
Creecy said in this initial phase of Private Sector Participation, the RFI focuses on these corridors:
- Northern-Cape to Saldanha Bulk Minerals Corridor, primarily for iron ore and manganese exports and the Northern-Cape to Nelson Mandela Bay Corridor, primarily for manganese exports.
- Limpopo and Mpumalanga to Richards Bay Bulk Minerals Corridor PSP Project for coal and chrome exports, including provision for magnetite exports in port.
- Intermodal Supply Chain PSP Project focused on the container and automotive sectors, including the potential designation of the South African container port system as a regional transhipment hub for major shipping lines.
“The RFI represents a pivotal step forward in our shared commitment to building a 21st-century transport system that goes beyond mobility to strengthen industrial competitiveness, deepen regional integration and drive inclusive economic growth.
“It will enable us to articulate the challenges in a structured and coherent way, clearly defining their scope, context and impact to inform the development of focused, strategic and sustainable solutions. In this regard, the department will ensure that the views of a range of other stakeholders are brought into the deliberations, including organised labour.”
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Principles for Private Sector Procurement
According to Creecy, the formal procurement phase from the end of August 2025 will be guided by these principles:
- Reforming Transnet in accordance with the Cabinet-approved Roadmap for Freight Logistics
- Ensuring a just transition to a reformed rail and port logistics system, prioritising maximum job retention for employees of Transnet and the Passenger Rail Agency of South Africa (Prasa). A joint work stream was set up to consult with organised labour as the process unfolds
- Safeguarding immovable assets by retaining them under state ownership for the benefit of future generations and preventing the balkanisation of the rail and port system
- Actively promoting localisation, industrialisation and support for key sectors such as steel production and local rail manufacturing
- Demonstrating government’s commitment to Broad-Based Black Economic Empowerment and gender equality by providing strong support to new and emerging players in the rail and port sectors, including Small and Medium Enterprises (SMEs) and Small, Medium and Micro Enterprises (SMMEs).
Interested private sector companies can complete the RFI online on the department’s website or directly at www.psp-rfi.co.za until 9 May 2025.
