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Wednesday 16 January 2019
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Government’s costly ‘silo’ thoughts

…Jooste says port expansion and railway upgrade should have been integrated

The port expansion project underway at Walvis Bay is predicted to propel the economy to a new level of prosperity, but experts have warned that maximum benefits will not be derived if the rail network is not improved. Despite the lofty ambitions, Government’s stranglehold on funding to improve the rail network remains a key concern. TransNamib currently account for about 5 – 10% of all the bulk freight transport in and out of the Walvis Bay port. The rest of the freight is being transported by road.  This is said to be an untenable situation resulting in massive cost to Government due to the resultant damage to the road infrastructure and the possible direct and indirect cause of road accidents due to the exceptionally high heavy volumes of large trucks on the roads. Now, and over the next few years, Namibia will shift its freight from road to rail, cutting both enormous logistical costs and reducing traffic on the road network. One senior figure in government said he remains “gobsmacked” that government is willing to invest to expand the port yet it is hesitant on availing funds to improve the rail network which in actual fact must be the key transport facility of goods checked-in at the port. “It does not make sense, without the rail network it is pointless to spend so much money on the port expansion and ignore the rail. I see this creating more congestion on the roads because the additional cargo that will result from the port expansion will have to be transported on the road network, this can have a negative effect on the entire transport system, said the official.
The official noted that “if you’re serious about growing the economy of the country, you have to look at investment in transport and take advantage of the dependence landlocked countries have on our port facilities.” Minister of Public Enterprises, Leon Jooste, says “I share these views 100%.”  “In fact, I would have preferred if Government at the time planned and funded the entire integrated project rather than the silo approach where the port expansion was isolated. The integrated project consist of the port expansion as the foundation and then the rail upgrade and TransNamib revival as second priority followed by the upgraded road infrastructure to connect to the Trans-Kalahari and Trans-Caprivi road network to the port and then Walvis Bay airport,” he said. He said the rail component is the primary enabler to unlock the potential of the port expansion project which is why the rail infrastructure upgrade and rehabilitation is immensely important.  While government has cried foul over congestion on the national roads, saying it is partially to blame for the high number of road crashes that continues to ravage the country, the apparent lack of political will to pump money into TransNamib paints a different picture. Jooste, warned that an over-reliance on road transport for bulk freight transport is something that all countries try to avoid and various policies and regulations are utilized to ensure that this is the case. “In fact, many countries even subsidize private rail operators to ensure that the largest percentage of freight is carried via rail transport rather than road.”
A meeting was held by the Cabinet Committee on Treasury this week to discuss the possible capitalization of TransNamib. Insiders are divided over whether TransNamib should operate as a fully state-owned entity or whether it should entered into a public private partnership. TransNamib is a Public Enterprise with significant strategic value and we have to do our level best to restore this company to fulfill its mandate he said, adding that they[TransNamib] have a good balance sheet, which after some restructuring will enable them to fund a significant portion by leveraging their assets. “I believe that we will also be able to raise funding for TransNamib and the rail infrastructure from the various development funding institutions to alleviate the reliance on Treasury. There is significant appetite from various institutions to participate in this sector and I am confident that some “out-of-the-box” creativity will allow us to access non-conventional solutions,” said Jooste. Meanwhile, Namport CEO Bisey Uirab said a good railway network is key to Namport’s future plans of substituting transshipment cargo with transit cargo, but pointed out that the business case for the new container terminal project is based on transshipment cargo, thus, the business case is not dependent upon the rail network to start off with.
Uirab said a good railway network will also see the reduction in local and regional freight rates simply because it is cheaper to transport cargo on rail then it is to transport cargo on the roads. “It needs to be emphasized that the transshipment business is not our long term anchor, we have plans to slowly but surely replace transshipment business with transit business, i.e., imports and exports into SADC countries by road and rail. We expect this transit business to grow gradually over many years.  Thus, when transit cargo volumes start increasing significantly in the medium to long term then the railways becomes a much needed necessity since it then becomes more cost effective and thus competitive to transport this cargo on the rail,” he said. Historically, the Namibian railways have played a leading role in carrying passengers and cargo across the country, but in recent years the rail systems to have taken a backseat due to dilapidated railway lines. The state of railways in the country did not seem to have any major impact on Namport’s operations.
And according to Uirab: “Although the railways have played a lessor role in the transportation of cargo to and from Namibian ports, both ports have still seen a steady increasing trend in cargo volumes since Namport was created in 1994, although a significant part of these volumes are transshipment cargo.” “The peaks and troughs that we experience are normal in the seaport business, but the overall trend remains on positive growth. We believe that the Namibian railways do have an import role to play and that it is only a matter of time before we realize its true potential.  Both Namibian ports will indeed benefit greatly from an efficient high capacity railway network,” he said. He underscored that a high capacity efficient railway network is also a key enabler to our goal of becoming a logistics hub in the region.




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