South Africa has shortlisted 11 private firms to manage its state-owned freight-rail network, Bloomberg reported on Friday. The shortlisted companies will now enter negotiations with South Africa’s rail operator, Transnet, for the management of its 41 routes and six corridors. The selected firm (or consortium) will be granted a 10-year operating license, but the government will retain ownership of the assets.

Big plans: Transnet is hoping to secure the private sector’s participation as part of a push to boost its freight capacity by an extra 20 mn tons of freight per year in FY 2026-2027 — aligning with the country’s target to increase rail transport capacity by 70 mn tons to reach 250 mn by 2029.

Why does South Africa want Transnet out of the picture? South Africa’s government has been trying to end Transnet’s monopoly over the 21.2k km network for years as the firm struggled with mismanagement, allegations of corruption, and dropping cargo volumes. Transnet could not afford the investments needed to upgrade the rail network, forcing the government to approve a USD 5.4 bn (ZAR 95 bn) in credit assurance against default for debts in the next five years, on top of the previously pledged USD 3 bn (ZAR 51 bn).

REMEMBER- Regional players have been eyeing South Africa and its ports: Red Sea Gateway Terminal International (RSGTI) is mulling a Transnet tender to develop and operate one of its fresh produce terminals at Durban port — and was set to make a USD 600 mn+ offer for the port. DP World is also considering investing in Transnet’s partial privatization, including USD 3 bn in Africa’s new port infrastructure over the next five years.

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