Allow me to acknowledge my fellow cabinet members, Minister Meth, Deputy Minister Masando, the leadership of SIEFSA, our moderator for this conversation. And perhaps what I should do before I get into the freight and logistics issues, is just to pick up the story where Deputy Minister Masando left off. And I think that what's important to share with you is when we had our Cabinet Lekhotla soon after we were appointed early in July, we took a decision that the apex priority of this administration has to be rapid, inclusive, sustainable economic growth that will create jobs.

And in that regard, we also identified a number of sub-priorities, which I think I just want to mention them very quickly, because I think they will be of interest to you. The first is to prioritise infrastructure development, and obviously we all understand the crucial role that steel plays within the construction industry and within infrastructure development. Secondly, related to what Minister Masando was saying, is to continue the structural economic reforms underway through Operation Vulindlela, including the establishment of a competitive electricity market and the introduction of private sector competition in port and rail operations.

And thirdly, to implement the freight logistics roadmap to enable private sector investment and participation in port and rail, while ensuring that infrastructure remains state-owned. So those three are very important sub-objectives under the overall agreement that Cabinet made that inclusive and sustainable growth that creates jobs is our apex priority. Now, I think that we all understand in this room that an integrated transport system with rail as a freight and passenger backbone is what would facilitate the economic development that we are looking for.

But the reality that we all know is that both our freight and our passenger rail systems are operating in what I can politely term a sub-optimal manner. Particularly of concern here is our freight operations. And what we know is that while we have turned the corner from the devastating situations we saw in 2022 and 2023, we are still only moving somewhere in the region of about 150 million tonnes of freight per annum.

But industry requires us to be moving closer to the 250 million mark. Now, the reasons for this are historical, but in terms of the current situation, they relate to the poor state of infrastructure of our main freight corridors. It also relates to the poor state of equipment in our ports. And, of course, it relates to the difficulties we have with regard to accessing sufficient locomotives to move freight with the speed and efficiency that is requires. Now, you all know that Transnet has developed a recovery programme. And it's this recovery programme that has been responsible for turning the corner on the disastrous situation that we saw last year.

And I think since I came into this space, I've done quite a bit of visiting of the corridors and the ports. And what we've agreed at the Transnet AGM is that in order to intensify the recovery programme and to ensure that we have better integration of the private sector players that are helping us, and the different aspects of Transnet that work on the logistics value chain, we've agreed that we need to have a war room operating at Transnet. That war room needs to be meeting every day and must have all the representative players organised under the Chief Operations Officer. But we must also agree that to keep doing the same thing and expecting a different outcome, we all know what the definition of that is. So, what we've been saying is that Transnet is not going to be able under current conditions to recover on its own. And we need an industry-wide collaboration in order that we can take forward the recovery.

And this is where the National Logistics Crisis Committee that is coordinated by the Presidency comes from. Working on the basis of the freight logistics roadmap which was adopted by Cabinet in December, we have a whole series of work streams that would be looking at every aspect of the logistics value chain and looking at how cooperation amongst different role players will give us better results. But key here is, first of all, setting up the framework for third party participation.

So, the Department of Transport is working on setting up what we call the PSP framework and we will be setting up a private sector participation unit that will be operating under the DBSA so that we are able to learn from the kinds of reforms that we had in the electricity sector and we're able to make sure that when there is appetite to participate in the logistics sector, we're able to take these particular bids to financial close. What lies at the root of this reform program is the Transnet Network Statement. And we know that this was put out previously.

There has been public participation on it. I have said to Transnet and to the interim economic regulator that is assisting us that my wish is that we should be putting out the final network statement before the end of the year. Because it is that network statement that will enable the private sector to understand what is on offer in terms of private sector participation and what would the tariff be, what kinds of opportunities are there for build, operate and transfer. All of these things I think would be of great interest to the private sector. So what we understand when we interrogate the tariff is that the tariff has to be attractive to third party players. It also has to assist Transnet with its revenue raising requirements.

And so we are engaged in quite a complicated balancing act that would enable us to be able to put out a network statement that would be attractive to the private sector and I think at the same time would meet some of the needs that Transnet as an institution has. I think I would want to suggest that we pause there and obviously we can have a conversation in the Q&A.

Thank you very much.

NOTES
Operation Vulindlela reforms mean that the government is opening up Transnet for third-party operators as operators and potentially as investors. The question for the industry is no longer how you are going to relate to the government, but how you are going to relate to third-party operators. I want to suggest that this requires a paradigm shift—a shift for the industry and a shift for government.