Revitalising rail : the case of public-private partnerships

Thesis (MCom)--Stellenbosch University, 2022.ENGLISH SUMMARY: In response to the degrading state of the national passenger railway service, the President of South Africa recently announced plans to revitalise the service through private sector integration. This study set out to investigate the current financial and economic feasibility of the South African passenger railway service in order to determine the merits of potential private sector integration as a method of railway reform. The study utilised primary data, provided by the Passenger Railway Agency of South Africa (PRASA), as well as publicly available secondary data, to perform an adjusted Cost-Benefit analysis (CBA) wherein both the financial and economic feasibility of the South African passenger railway service were investigated. To this end, the Cape Town Southern line was employed as a case study subject, under which the population growth, modal split, and travel demand were forecast over a 20-year analysis period. While the financial analysis aimed to determine the financial sustainability of the Southern line, the economic analysis explored the feasibility of rail use relative to alternative transport modes, with consideration for the direct and indirect costs of travel. Finally, the analysis determined the effects of private sector participation on both the financial and economic feasibility of the Southern line. The analysis found the existing service to be both financially and economically not feasible. The financial costs associated with each journey on the Southern line were found to far exceed the revenue generated, culminating in considerable fiscal deficits and heavy reliance on government subsidisation. Economically, the Southern line was found to have the highest economic costs per journey out of all modes investigated - largely the result of excessive travel time costs. Through incorporating the possible effects of public-private partnerships (PPPs), the analysis estimates financial and economic savings of R2 billion and R20 billion respectively, in comparison to the base alternative. Even though financial savings occur under private participation, the analysis found that the service would remain dependent on government subsidisation. Economically, however, the Southern line would become viable under private control. Therefore, since PPPs would lead to improvements in financial sustainability, as well as economic feasibility, the conclusion is made that private sector participation is a viable method of passenger railway reform in South Africa.AFRIKAANSE OPSOMMING: In reaksie op die vernederende toestand van die nasionale passasierspoorwegdiens, het die President van Suid-Afrika onlangs planne aangekondig om die diens ‘n nuwe asem te gee deur privaatsektor-integrasie. Hierdie studie het ten doel gehad om die huidige finansiële en ekonomiese haalbaarheid van die Suid-Afrikaanse passasierspoordiens te ondersoek, ten einde die meriete van potensiële privaatsektor-integrasie as 'n metode van spoorweghervorming, te bepaal. Die studie het primêre data, verskaf deur die Passasierspoorwegagentskap van Suid-Afrika, sowel as publiek beskikbare sekondêre data gebruik om 'n aangepaste koste-voordeel-analise uit te voer, waarin beide die finansiële en ekonomiese haalbaarheid van die Suid-Afrikaanse passasierspoorwegdiens ondersoek is. Vir hierdie doeleindes is die Kaapstad-Suidelikke spoorlyn aangewend as 'n gevallestudie area, waaronder die bevolkingsgroei, modale verdeling en reisaanvraag oor 'n 20-jaar-ontledingstydperk voorspel is. Terwyl die finansiële ontleding daarop gemik was om die finansiële volhoubaarheid van die Suidelike lyn te bepaal, het die ekonomiese ontleding die haalbaarheid van spoorgebruik relatief tot alternatiewe vervoermetodes ondersoek, met inagneming van die direkte en indirekte koste van reis. Laastens het die ontleding die uitwerking van privaatsektor-deelname op beide die finansiële en ekonomiese haalbaarheid van die Suidelike lyn bepaal. Die ontleding het bevind dat die bestaande spoorwegdiens finansieel en ekonomies nie haalbaar is nie. Daar is gevind dat die finansiële koste verbonde aan 'n reis op die Suidelike lyn die inkomste wat gegenereer is ver oorskry, wat uitloop op aansienlike fiskale tekorte en groot afhanklikheid van staatsubsidies. Ekonomies is gevind dat die Suidelike lyn die hoogste ekonomiese koste per reis het uit alle modusse wat ondersoek is - grootliks die gevolg van buitensporige reistydkostes. Deur die moontlike uitwerking van publiek-private vennootskappe in te sluit, skat die ontleding finansiële en ekonomiese besparings van onderskeidelik R2 miljard en R20 miljard, in vergelyking met die basisalternatief. Al vind finansiële besparings onder private deelname plaas, het die ontleding bevind dat die diens van staatsubsidies afhanklik sal bly. Ekonomies sou die Suidelike lyn egter lewensvatbaar word onder private beheer. Daarom, aangesien privaat sektor integrasie sal lei tot verbeterings in finansiële volhoubaarheid, sowel as ekonomiese haalbaarheid, word die gevolgtrekking gemaak dat die beleid 'n lewensvatbare metode van passasierspoorweghervorming in Suid-Afrika is.Master