Southern African railways utilities Transnet and Swaziland Railways have agreed to package the 146-km ‘Swazilink’ greenfield line between Lothair, in South Africa, and Sidvokodvo, in Swaziland, as a public–private partnership (PPP) and may release an international tender for a 20- to 25-year concession by October.
The route for the R12-billion to R16-billion project has already been determined following a detailed feasibility study and the two State-owned companies are currently in the process of acquiring land on both sides of the border, while upgrading associated infrastructure.
However, Swaziland Railways and Transnet will now ringfence the venture as a special- purpose vehicle (SPV), in which the two utilities will hold a minority 49%, with the 51% balance to be owned by private investors.
Should the SPV materialise as planned, it would be the largest PPP undertaken to date by either utility and will be aligned with Transnet’s private-sector participation framework, which is operating alongside the group’s rolling R277.8-billion market demand strategy.
Both funding partners, as well as companies with established logistics capabilities, will be targeted in the tender, which will include volume guarantees.
The initial general-freight volumes set aside for the SPV are currently transported on Transnet’s coal line to Richards Bay, in KwaZulu-Natal. However, the call for bids is also likely to outline potential road volumes that could be transferred across to the rail link over the concession period.
About five-million tons of general freight a year would be guaranteed, while details could be provided for displacing a further six-million tons a year from road to rail over the short to medium term. Over the full concession period, it is anticipated that volumes could rise to above 30-million tons.
Transnet CEO Siyabonga Gama tells Engineering News that the operating model and funding structure are still to be finalised, but that both utilities agreed in late 2016 to support the SPV concept. There is also potential to integrate the SPV into various other cross-border freight logistics plans involving Botswana and Mozambique.
Gama says it is premature to confirm when the international tender will be released, as various discussions and processes are still under way between Transnet and Swaziland Railways.
However, it is possible that the tender will be released in either September or October for adjudication in early 2018. Depending on responses, the winning bidder could begin construction by the middle of next year. The project is expected to involve a 30-month construction period.