High-speed rail in South Africa: too costly to consider

On Thursday, Business Day reported that “the Department of Transport will commission its first independent, nationwide study into the cost and feasibility of high-speed trains between major cities, running at speeds as high as 400km/h”.

“The future of rail is high speed,” Mr Vilana said. In the “intermediate” term, the focus of the government, through state-owned commuter rail company the Passenger Rail Agency of South Africa (Prasa), was on getting “higher speeds” of between 140km/h and 160km/h on the narrow-gauge infrastructure.

“Certainly, going forward, we need to move to high-speed, standard-gauge rail,” said Prasa strategic network planning GM Hishaam Emeran.

For high-speed rail to succeed it must offer a “competitive journey time of about four hours over distances of 800km-1,000km”, he said, after which the trains would start to compete with airlines.

In the discussions on high-speed trains, “Durban to Johannesburg features strongly”, he said, adding that Cape Town to Johannesburg was also being mooted, “but that is a bit on long side … (unless) you start building key intermediate stops such as Kimberley or Bloemfontein and it starts opening up — you get a different picture then”.

There was also “huge demand from Polokwane to Gauteng, and then even further north. The feasibility studies will indicate where that is necessary,” he said.

High-speed rail is not a new idea, and it is enticing: it could provide South Africans and tourists with an affordable and safe way to travel long-distance, could reduce our dependence on oil, and, much like the 2010 FIFA World Cup and the Gautrain, could signal South Africa’s rise as an emerging power on the continent. Also, other countries are doing it: it’s difficult to imagine travelling in Europe without using the high-speed rails that permeate the landscape. But high-speed rail is not just a developed-country phenomenon any more. China has a vast rail network that is continually expanding: according to ChinaTimes, the country has recently completed “a 2298 kilometer line between the capital and Guangzhou which will cut the travel time between the two cities from 22 hours to just eight, with bullet trains travelling at 300 km per hour. The journey will take passengers through six provinces, 28 cities, 35 stops in major cities such as Zhenzhou, Wuhan and Chengsha, providing rapid rail service to 400 million people in the country’s heartland.” Many other developers, from Turkey, to Taiwan, to Turkmenistan, have high-speed trains.

Economic theory suggests that infrastructure is a key building block of economic growth: it facilitates lower transport costs, boosting trade and market integration. (Read a longish overview here.) Several economic history papers also show the significant long-term implications of rail infrastructure: Dan Bogart proves that transport revolutions before and during the Industrial Revolution decreased freight charges by 95 percent in real terms from 1700 to 1870 implying an annual TFP of more than 2 percent, meaning that “transport improvements were major factor in raising the standard of living in Britain and were as significant as other innovations”. Alex Moradi and Remi Jedwab show how two railway lines built in Ghana between 1901 and 1923 unintendedly opened vast expanses of tropical forest to cocoa cultivation, allowing Ghana to become the world’s largest producer. And in a recent essay, Bantu Mahali, a graduate student at Stellenbosch, shows how Free State farmers in the 1880s successfully agitated the colonial government to remap the proposed railway line to the mines in the interior to avoid passing through Basotho territory, then the bread-basket of the rapidly growing mining settlements. The result was that affluent Basotho farmers lost huge market share to cheap imports from the United States and Australia from where grain could be transported at a much lower cost to the mines (a distance of more than 8000 km!) than the grain grown on the slopes of the Drakensberg mountains just 300 km away. Incidentally, because of the persistence of railway lines, those spatial patterns still exist today.

High-speed rail seems to be the panacea to our problems. So I’ve let my imagination run wild and mapped what the ideal high-speed rail system would look like: Stage 1 would see a connection between Durban and Johannesburg, and between Johannesburg and Louis Trichardt (the North-South corridor). Stage 2 would extent this network to East (Maputo through Nelspruit) and West (to Gaborone through Rustenburg, and to Bloemfontein through Welkom). Stage 3 could see Bloemfontein extend it’s network to Kimberley and Maseru. Stage 4 would then link Bloemfontein to Cape Town through the arid Karoo. Further stages could be added extending north into Africa.

But, in truth, this can be no more than a pipe dream. The reason: it is simply too expensive. China currently builds the world’s cheapest high-speed rail, at $24 million per kilometre of line. (Germany is double that, Korea slightly lower at $40 million.) A railway line between Johannesburg and Durban would be about R120 billion (assuming a distance of 500 km and an exchange rate of R10/$), less than the R160 billion touted by Japan International Consultants, but still significantly more than the Medupi power plant that is currently under construction. If all the links on my map above were to be built, the (very conservative) costs would total R1 128 000 000 000 (or R1.1 trillion). That would double South Africa’s current external debt.

And these are just the construction costs. Land has to purchased to allow the new rails to be built (remember, South Africa’s existing railway lines are all smaller-gauge, which means they will have to be replaced entirely by standard-gauge on which these high-speed trains run). Land is probably cheap in the Karoo, but less so in the urban centres. And then there are the operational costs: these will hopefully be covered by user fees, but who will pay if they are not? In an earlier study, Estian Calitz and I looked at the financing options for the Gautrain and other such infrastructure projects. The construction of the Gautrain was financed by government (i.e. South Africa’s current and future tax payers), while the operational costs are paid for through user charges (tickets). The same model would apply to high-speed rail, but it is unclear whether there will be enough users to even cover operational costs. A plan to build a high-speed rail between Sydney and Melbourne in Australia was recently abandoned for these exact reasons.

A South African high-speed rail network sounds like a great idea. And there’s no doubt many will benefit from the greater freedom that low-cost travel brings. But, unfortunately, the cost of construction is simply too great, the opportunity cost simply too high. High-speed rail cannot be an option, at least for the foreseeable future.