Spoornet to invest R1,6bn in Coega line

Posted On Thursday, 12 July 2007 02:00 Published by eProp Commercial Property News
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Rail utility Spoornet would spend an extra R1,6bn in the next four years to build new railway lines linking Coega and Lephalale (Waterberg) coal mines to its national rail network

Property-Housing-ResidentialThe aim is to create capacity before demand rises and bring bulk freight back to rail.

The new investment is not part of the R35,8bn Spoornet will use to buy new locomotives and wagons and install signals systems in the next five years.

Spoornet finance executive Johan Bouwer said yesterday that the state-owned group would spend R817m on constructing a railway line connecting the port of Ngqura to the existing track in Port Elizabeth. The other portion of the budget would be used to electrify parts of the existing rail line between Johannesburg and Port Elizabeth.

Capacity of the rail link between Northern Cape and Port Elizabeth would be improved.

Of Spoornet’s 20047km national rail network, only 8441km was electrified. The plan was to electrify all the major rail corridors .

Bouwer said a further R800m would be used to construct a rail link between the Lephalale coal mines and Richards Bay Coal Terminal. Although the power utility would use most of the coal from the Limpopo-based mines, substantial volumes would be exported to Europe and China.

Customers have blamed Spoornet for chronic capacity constraints and inefficiencies. Derailments added to Spoornet’s challenges.

These problems led to the parastatal losing most of its customers to road freighters.

Transport Minister Jeff Radebe said last year that the failure of Spoornet to cope with the increasing demands of the growing economy for rail freighting had reduced the country’s economic growth.

He said rail traffic grew only 0,3% between 1993 and 2004, while road traffic rose 5%. In addition, the number of new trucks on South Africa’s roads had risen 16,5% in the past three years whereas the number of locomotives and wagons had decreased 33% and 28% respectively in the same period.

Despite these challenges, Spoornet managed to increase its revenue 4% to R14,6bn in the 2006-07 financial year.

Spoornet CEO Siyabonga Gama said in May that the rail company now had a market share of about 10%. The plan was to claw back lost business opportunities, and have a market share of at least 30% in the next five years.

To achieve this objective, the company had placed an order for 110 new locomotives, and a tender for a further 212 new locomotives would be issued soon.

The majority of the new trains would be used to boost the capacity of the ailing General Freight Business (GFB) unit.

Last year, the GFB division transported 80-million tons of freight, and the plan was to double the volume by 2011.

Spoornet said the new acquisitions and improved operational efficiencies would enable it to move about 226-million tons of freight from 2012.

This would be achieved by increasing to 300 (from 200) the number of wagons each locomotive was able to pull.

Gama said the capacity of the dedicated coal export railway line between Ermelo and the Richards Bay Coal Terminal would be increased to 84-million tons a year from 78-million tons a year by 2009.

About R5bn had been budgeted for this project, and a further R4bn would be spent on the dedicated iron-ore export line between Sishen and Saldanha Bay.

Spoornet said it would use its competitive advantage of being able to transport huge quantities of freight at cheaper rates to reclaim its market share on the Durban-Johannesburg corridor.

Volumes enjoyed by Spoornet on this route peaked at 76 000 tons a day in the 1989-90 financial year, but have dropped to about 50 000 tons a day because of competition from road transport.

About 514 old wagons would be repaired this year, while those that had reached the end of the lifespan would be decommissioned.

“The plan is to have a smaller but more capable fleet. We want to be able to do more with less,” Spoornet said.

Last modified on Wednesday, 25 June 2014 11:27

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