Chinese firm in development talks for South Africa commuter rail project

Plans to develop the Moloto Rail Development Corridor are among “key projects” outlined in a memorandum of understanding signed by both organisations at the second Investing in Africa Forum in Guangzhou, China.

The South African Government News Agency said the Moloto project, linking Gauteng, KwaNdebele and Sekhukune, “is a direct response by government to excessive traffic congestion, numerous fatal road accidents and general economic underdevelopment in the area”.

The project’s “main objective is to ensure that passenger rail becomes the backbone of an integrated multi-modal transport system, using proven state-of-the-art rolling stock and equipment”, the agency said.

According to PRASA, the Moloto rail project includes plans to upgrade the road network along the route for a commuter bus network as part of an “inter-modal transportation solution”. PRASA said its “main objective is to increase speed for buses from 70km per hour to 120km/h along the route and from 160km/h to 200km/h for standard gauge trains, thereby reducing travelling time for commuters”. 

The acting chief executive officer of PRASA Collins Letsoalo said a feasibility study for the project had already been completed and “the real work will begin soon”.

South African president Jacob Zuma told the Investing in Africa Forum the Moloto project “is designed to change the quality of life for people in the area by cutting the long commuting distances from home to work”.

Zuma said: “Africa is open for business. Africa is open for partnerships with China. A lot of economic interaction is already taking place between China and Africa with good results.”

Project finance expert Navjeet Virk of Pinsent Masons, the law firm behind Out-Law.com, said: “This is yet another example of China’s increased investment in African infrastructure and commitment to economic involvement in South Africa. The 'good results' which president Zuma communicated in his invitation for further economic interaction and increased industrial productivity levels, indicate that a successful ongoing partnership with China is to be expected.”

China is already a key player in South Africa’s transport infrastructure development programme. In March 2014, South Africa’s state-owned freight transport and logistics company Transnet awarded what it said was the biggest locomotive supply contract in the country’s history to Chinese and South African firms.

Transnet said the ZAR 50bn ($4.5bn) contract to build 1,064 locomotives was South Africa’s single biggest infrastructure investment initiative by a corporate and was designed to support government efforts aimed at ‘road-to-rail migration’.

Last year, the central banks of South Africa and China signed an agreement to establish a yuan clearing business in South Africa “to boost investment and trade”.

The Forum on China-Africa Cooperation (FOCAC) said last month that China plans to double a special development fund for Africa to $10 billion and expand financial support for small firms on the continent.

The China Africa Development Fund hit its initial target of pooling $5bn for equity investments in Africa towards the end of last year.