Executing public-private partnerships in transport infrastructure
Executing public-private partnerships in transport infrastructure
A public private partnership (PPP) has been mooted by many as the solution to South Africa’s transport woes – especially when it comes to the country’s ports. In this two-part article, PROF John MALULEKE explains how a PPP can be implemented.
From a rail transport economics perspective, a transport system is underpinned by three essential elements: infrastructure (buildings and rail tracks), rolling stock, and control. The same transport systems elements apply when dealing with sea transport economics matters. In this two-part article, the sea and rail transport infrastructure form the basis of discussion, with a particular focus on describing how a PPP can be potentially executed within the context of the seaport environment.
To be more specific, the discussion hinges on South Africa’s state-owned entity, Transnet Limited (Transnet), and its two major strategic business units: Transnet Port Authority (TPA) and Transnet Freight Rail (TFR). Figure 1 illustrates the port area infrastructure, as well a denoting an interface with TFR within which maritime and rail transport logistics activities take place.
What is the status quo of South Africa’s Port Authority?
As indicated in Figure 1, the port area is a complex transport infrastructure that consists of the berths and adjacent land where maritime and land-based logistics activities are performed. There are exclusive activities within the port area which the public sector is mandated to perform. In a port that has adopted the Landlord Port Model, the Port Authority owns the port infrastructure and is also in charge of its management. It is worth noting that the provision of access to inbound ships remains the exclusive role and responsibility of the public sector (Port Authority), which in this case refers to TPA, as the owner of the port infrastructure. The port regulator, on the other hand, regulates the maritime logistics operations.
Safety as a user requirement at seaports
Maritime safety is one of the indispensable transport user requirements that must be promoted at all times, and refers to the protection of freight and crew in vessels, as well as encompassing the protection of those living or working near the coastal territorial waters. A high density of vessel traffic heading towards the access zone of a port potentially increases the probability of collisions, especially during turbulent conditions at sea. It is therefore mandatory that regulations on general port safety and quality of services be strictly the prerogative of the public sector for absolute compliance monitoring and evaluation.
The concept of maritime safety is an absolute requirement, particularly when the inbound vessel has to be piloted to the berth area. In many countries, pilot usage is compulsory for vessels above a certain capacity, particularly for ships transporting dangerous cargo. When piloting a vessel, it is advisable to have a technical expert on board. Such an expert should have comprehensive knowledge of port characteristics and be on the ship at all times as it enters and exits the port area. In SA it is the responsibility of the South African Maritime Safety Authority (SAMSA) to manage the safe piloting of vessels and ensure safe port entries and exits. SAMSA prescribes the requirement for the appointment of vessel operators and the expertise required to operate in a particular coastal zone.
PORT SUPERSTRUCTURES (cranes, pipes, terminal sheds)
While the port area belongs to the Port Authority in terms of the Landlord Port Model, the private party may own assets such as port superstructures. The private sector is at liberty to procure technologically advanced equipment, so as to enhance the berth occupancy ratio in the port area. Just as in ports like Buenos Aires and Rotterdam, South Africa’s port operation model follows the operation principles of ensuring that the port infrastructure belongs to government, while the operation is left in the hands of the private sector. The private party is given a degree of flexibility when procuring superstructures during the PPP bidding process.
LAND ACCESS INFRASTRUCTURE (railways, inland navigation channels)
In South Africa, the rail transport network is owned by TFR, while the seaports are owned by TPA, which falls under the Department of Public Enterprises. Neither TFR nor TPA – as the owners of the transport infrastructure – can be seen as exclusive owners and operators of their respective infrastructures. The concept of vertical ownership – which has allowed a state-owned entity such as Transnet to own and operate the transport infrastructure – is gradually fading away. The current trend is to ensure that transport infrastructure is owned by government, while operations are left to the private sector, to compete for the market through PPP models.
In a PPP setting, the main focus of analysis becomes the rail and sea transport infrastructure – in other words, the rail network and its associated infrastructure linked to the seaport area. It is at this inter-modal facility where it has to be decided what the status quo of the multi-modal facility should look like – and to what extent the facility must be developed to compare favourably with international PPP trends. In South Africa, the rail network and control system should remain under the public sector, leaving the procurement of innovative equipment to the private sector in order to respond to the output specifications, as outlined during the PPP bidding process.
Rail transport networks: the UK experience
In countries such as the United Kingdom, a rail network company is separate from the private sector train operating entities striving to compete for access to the rail network. This is what happens: private sector train operating entities apply for access to the network, then the safety and economic regulatory authorities rigorously ensure that there is full compliance with both safety and economic regulations. When applying this model to the South African situation, the contemporary Railway Safety Regulator would ensure that all safety regulations are complied with before a safety permit can be issued. The Railway Economic Regulator, on the other hand, would ensure that there is absolute compliance with economic regulations, such as determining access tariffs and the maximum and minimum rates which train operating companies are required to charge rail transport users.
In South Africa, this means that a new independent state-owned entity that owns the rail transport infrastructure must be established. On the maritime side, meanwhile, TPA has to be given the autonomy to manage the port transport infrastructure within the South African territorial waters, as contained in the South African Integrated Coastal Management Act, Act No. 24 of 2008.
- Part two of this article will appear in the next issue of FOCUS.
Published by
One Comment
Leave a comment
focusmagsa
We need the Polokwane,Mpumalanga,Durban and Mafikeng trains to help reduce lots of accidents happening on our roads and to allow speeding of transportation of goods.