30-YEAR LONG-TERM PLANNING FRAMEWORK

Transcription

1 30-YEAR LONG-TERM PLANNING FRAMEWORK 2017 EDITION Transnet SOC Ltd 2016 LTPF 2016

2 TABLE OF CONTENTS LTPF 2016 CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 CHAPTER 5 CHAPTER 6 CHAPTER 7 CHAPTER 8 INTROUDCTION FREIGHT DEMAND PLAN RAIL DEVELOPMENT PLAN PORT DEVELOPMENT PLAN PIPELINE DEVELOPMENTS PLAN NATURAL GAS INFRASTRUCTURE PLANNING AFRICA TRANSPORT DEMAND AND INFRASTRUCTURE PLANNING CAPITAL PLANNING Transnet Group Capital Carlton Centre 150 Commissioner Street Marshalltown, Johannesburg 2001 Transnet SOC Ltd 2016 LTPF

3 CHAPTER 1 INTRODUCTION CPRC EPRC FSRUs GBP HDSA IDZ KCDI LNG LTPF MDS MPP NDP NIP OEM PICC SIPs SRL TE TEU TFR TIP TNPA TPL TPT WPRC Central Port and Rail Corridor Eastern Port and Rail Corridor Floating Storage and Regasification Units Gauteng Basin Plan Historically Disadvantaged South Africans Industrial Development Zone Key Capacity Development Initiatives Liquefied Natural Gas Long Term Planning Framework Market Demand Strategy Multi-Product Pipeline National Development Plan National Infrastructure Plan Original Equipment Manufacturer Presidential Infrastructure Coordinating Commission Strategic Integrated Projects (as part of PICC) Swaziland Rail Link Transnet Engineering Twenty-Foot Equivalent Container Unit Transnet Freight Rail Transnet Infrastructure Plan Transnet National Ports Authority Transnet Pipelines Transnet Port Terminals Western Port and Rail Corridor 2

4 ACRONYMS AND ABBREVIATIONS CPRC EPRC FSRUs GBP HDSA IDZ KCDI LNG LTPF MDS MPP NDP NIP OEM PICC SIPs SRL TE TEU TFR TIP TNPA TPL TPT WPRC Central Port and Rail Corridor Eastern Port and Rail Corridor Floating Storage and Regasification Units Gauteng Basin Plan Historically Disadvantaged South Africans Development Zone Key Capacity Development Initiatives Liquefied Natural Gas Long Term Planning Framework Market Demand Strategy Multi-Product Pipeline National Development Plan National Infrastructure Plan Original Equipment Manufacturer Presidential Infrastructure Coordinating Commission Strategic Integrated Projects (as part of PICC) Swaziland Rail Link Transnet Engineering Twenty-Foot Equivalent Container Unit Transnet Freight Rail Transnet Infrastructure Plan Transnet National Ports Authority Transnet Pipelines Transnet Port Terminals Western Port and Rail Corridor 3

5 1 INTRODUCTION ENERGY DEMAND FORECASTS SUMMARY OF THE RAIL CHAPTER SUMMARY OF THE PORTS CHAPTER SUMMARY OF THE PIPELINE DEVELOPMENT CHAPTER SUMMARY OF THE GAS INFRASTRUCTURE CHAPTER SUMMARY OF THE AFRICA TRANSPORT DEMAND AND INFRASTRUCTURE PLANNING CHAPTER LONG-TERM PLANNING FRAMWORK DEVELOPMENT PROCESS LONG-TERM PLANNING FRAMEWORK EVOLUTION PORT AND RAIL CORRIDOR DEVELOPMENT PLANS NATIONAL INFRASTRUCTURE PLAN TRANSNET INFRASTRUCTURE PLAN LONG-TERM PLANNING FRAMEWORK PLANNING PRINCIPLES AND OUTPUTS THE TRANSNET PLANNING HIERARCHY THE TRANSNET PLANNING CYCLE THE LTPF RAIL DEVELOPMENT PLAN PORT DEVELOPMENT PLAN PIPELINE DEVELOPMENT PLAN AFRICA TRANSPORT DEMAND AND INFRASTRUCTURE PLANNING GAS INFRASTRUCTURE PLANNING CAPITAL PLANNING

6 1. INTRODUCTION Transnet s Long-Term Planning Framework (LTPF) provides the Transnet business and broader stakeholder community with a planning framework within which the long-term development of South Africa s freight transportation network and the expansion of Transnet s operational footprint can be executed. Driven by freight demand projections for the next 30 years, the LTPF provides the capacity development and investment opportunities which are needed to ensure Rail, Port and Pipeline capacity is developed in an integrated manner ahead of demand. The LTPF is not an operational planning blueprint, but rather a long-term unconstrained framework that identifies the movement of freight locally and regionally and considering this demand, projects the infrastructure and capital requirements needed to meet that demand. As a framework, the objective of the LTPF is to guide strategic investment decisions and to offer an impartial view of capacity requirements not impacted by affordability, profitability and other business constraints. The LTPF thus provides guidance, direction and context within which Transnet s short term seven-year business plan (Corporate Plan) is prepared alongside the Market Demand Strategy (MDS). The Corporate Plan differs from the LTPF in that it considers business risk, capital availability, implementation constraints and market commitments in determining what will be executed in the next seven-year period. Further, the LTPF is extensively shared with Transnet s Shareholder, thereby acting as an important link between national developmental strategies, policies and corporate capital plans. The LTPF is then positioned to provide Government with sound future projections, which may then inform strategic national level decisions. The LTPF 2016 is the first edition developed for digital distribution only. Please note this long-term framework planning is not a business or operational plan, and is unconstrained to capital planning and independent to other more detailed Transnet business and operating division (OD) plans. The LTPF is only a planning tool, to guide Transnet and all external and public stakeholders. The LTPF is published annually and is available at The LTPF 2016 represents a minor update from the 2015 edition and essentially just adjusts for a revised demand forecast. The following elements have nonetheless changed in this edition. 1.1 Energy Demand Forecasts Energy demand forecasts have been added in Chapter 2 to show how Transnet s energy profile will potentially change in the future. Energy demand for Transnet Freight Rail (TFR) in particular is recognised as a major driver for long-term infrastructure development and as such, needs to form part of the LTPF. 1.2 Summary of the Rail Chapter The view of rail as corridors has been further developed and refined in this edition, providing inputs on yards and terminals requiring upgrades as a result of improvements or changes in operational philosophy along the rail line. The rail chapter also has an embedded structure to improve its usability as a reference document. All core network systems have a similar structure in the document to enable the user to quickly access information required. A standardised view of the network has been promoted, incorporating the necessary infrastructure reconfiguration to allow for the new dual voltage locomotive fleet in the short term leading to conversion to 25kV AC traction strategy in the medium - to longterm. The distributed power technology is adopted for most corridors where it provides the most optimal operating model. The supporting infrastructure includes compilation yards and the consolidation of loops strategically positioned to facilitate efficient operations and maximise network slot utilisation. The capacity creation process adopts the MDS programmes to alleviate capacity constraints in the initial phases of capacity planning and subsequently roll out new interventions to further provide capacity to match the forecast demand. A view is also provided of how these interventions add to capacity. 5

7 1.3 Summary of the Ports Chapter The LTPF 2016 Port Chapter includes new introductory sections such as, a maritime economic review, summary of potential new port sites along South Africa s coastline and a deeper reflection and response to key Government strategies. Sustainability across the existing port system, as well as within proposed expansion plans, has also been reflected in more detail. New emerging technologies now also include vessel navigation, port security and new initiatives in port maintenance. The demand forecast includes an updated beneficiation scenario with an added Original Equipment Manufacturer (OEM) vehicle plant. Property planning has also been added as a new section. Container planning across the port system has been revised to align with new developments across the mega programmes. The individual port plans now include major project lists across the port system, along with more detailed capacity planning with alignment across the berth, terminal and external transport modes, as well as a more detailed assessment of importing Liquefied Natural Gas (LNG) through the port system. 1.4 Summary of the Pipeline Development Chapter The Pipeline Chapter has largely been updated based on the current work being undertaken to develop Transnet s liquid fuels master plan. The latest new Multi-Product Pipeline (MPP) expansion plans have also been incorporated, as well as a proposed fuel import terminal in Durban. Updates in Government and industry plans have been reflected in the timing of key projects, such as the development of new refining capacity and implementation dates on Clean Fuels 2 requirements. 1.5 Summary of the Gas Infrastructure Chapter The Gas Chapter has been expanded to include potential port and pipeline gas infrastructure across South Africa. The drivers for natural gas in South Africa are comprehensively updated, including feedback and alignment with Government s energy war room and Operation Phakisa initiatives. Gas energy for electricity generation has been included in the infrastructure options, along with the potential use of power barges. Gas infrastructure has focussed on three key regions, namely to the Western Cape (Port of Saldanha Bay), Eastern Cape (Port of Ngqura) and KwaZulu-Natal (Port of Richards Bay). 1.6 Summary of the Africa Transport Demand and Infrastructure Planning Chapter The Africa Chapter is informed with a regional infrastructure assessment study recently completed. A notable improvement over previous editions is the addition of a ranking of infrastructure projects on the continent, allowing Transnet to develop specific strategies around areas of interest. A condition and capacity assessment was conducted of railways outside the borders of South Africa, leading to opportunities being identified for Transnet s potential involvement. 6

8 2. LONG-TERM PLANNING FRAMEWORK DEVELOPMENT PROCESS The LTPF is updated annually and the development process spans over a 15- to 18-month planning cycle. Figure 1 provides a visual representation of the long-term planning logic adopted. Figure 1: Long-Term Planning Framework Development Process On the left hand side of Figure 1 is the current installed capacity of the network and the infrastructure for rail, ports and pipelines. The implication is that with the current infrastructure the organisation has certain capacity that allows it to handle up to a specific capacity of freight on the various rail networks, the ports as well as the pipelines. On the right hand side, the primary input is the 30-year freight demand forecast as published in the Transnet Demand Book annually. This forecast is used to determine future capacity requirements. By comparing installed capacity with future capacity needs, it is possible to determine when capacity will run out and how much new capacity would have to be created, and also when it will be required. Capacity planning specialists then produce a range of possible Key Capacity Development Initiatives (also known as KCDIs) to ensure capacity is provided marginally ahead of demand. These intervention options are evaluated and ranked and the most likely interventions are selected for inclusion in the LTPF. In producing the 30-year capital requirements, analysts also considers all current capital projects. There will necessarily, be differences between the unconstrained capital needs produced in the LTPF and the fundable and constrained capital plans of the Corporate Plan. This difference is called the Capital Requirements Gap and by analysing in detail how the two plans differ, it is possible to ensure longer-term guidance and alignment. This intelligence is thus used for the continuous improvement of the annual capital budgeting process. An outflow of this process is the energy needs of Transnet in the future that is derived from the volumes to be transported as well as the infrastructure and equipment that will be utilised. 7

9 3. LONG-TERM PLANNING FRAMEWORK EVOLUTION Originating in 2006 as a simplified long-term plan, the then publication focussed on Port and Rail corridor development plans. In subsequent editions (called the NIP and TIP) the focus was mainly on infrastructure capacity development and alignment between port, rail and pipeline plans. The framework evolved over time by progressively broadening and deepening its scope to become more holistic, to the point where the first LTPF was released in This evolution is depicted in Figure 2. Figure 2: Development of the Long-Term Planning Framework 1.7 Port and Rail Corridor Development Plans (PRC) The early 2006 and 2007 development plans launched, included the Eastern, Central - and Western Port and Rail Corridor studies (EPRC, CPRC and WPRC) to assess overall infrastructure investment needs across the rail and ports network. Shortly afterwards a Gauteng Basin Plan (GBP) was added, as well as the first 10-year view of freight demand. The initial development plans excluded a total capital cash flow view but did include detailed capital estimates for individual projects. 1.8 National Infrastructure Plan (NIP) 2008 saw the first cross-divisional integrated port, rail and pipeline development plan. Included in this edition was the first fiveyear capital plan which was based on the Transnet Capital Programme as well as a comprehensive 30-year plan for the entire rail network based on a scientific analysis of local freight demand. The NIP was presented to the Shareholder and to the Parliamentary Committee on Transport. A road-show followed to all major regions. 1.9 Transnet Infrastructure Plan (TIP) The Transnet Infrastructure Plan (TIP) was the first desktop published version which was circulated both within the business and to Transnet s Shareholder. The TIP included the first unconstrained 30-year capital plan, integration of environmental planning as well as alignment with the national New Growth Path. In addition to Port Fleet and Rolling Stock Fleet Development Plans, the TIP incorporated the rail-asset condition impact in the development plans. 8

10 1.10 Long-Term Planning Framework (LTPF) The LTPF has continued to evolve as business needs arise. Major improvements to the LTPF over the past four years include: Alignment of the plan with the National Planning Commission s National Development Plan; Inclusion of sustainability principles in infrastructure development planning; Alignment of the plan to Transnet s Shareholder Compact and Corporate Plan; Incorporation of regional freight demand and capacity planning, considering the Southern African Development Community and the overall Africa status quo; Introduction of gas; and The first Transnet-wide energy demand forecast. It is envisaged that the LTPF will continuously evolve but will remain focussed on the main purpose of indicating long-term capacity expansion options. The LTPF executive summary (this publication) only shows the most likely, summarised results extracted from the full body of knowledge of the LTPF. The planning team aims to develop a series of in-depth corridor-focused system reports into specific developments and options for clustered supply chains such as the Ore Line, Coal System, Durban Gauteng system, etc. In addition, the team has planned specific business-related forward-thinking papers, such as an intensive deep dive into the rail gauge challenge locally and regionally, as well as scenario planning to guide the business towards likely future possibilities. 4. PLANNING PRINCIPLES AND OUTPUTS A set of planning principles is followed in the development of the LTPF and is fundamental to the use of the framework. The 10 main principles adopted are: 1. Provide capacity marginally ahead of demand to enable and promote economic growth in South Africa and in the region; 2. Adopt sustainability principles as part of development plans, including improved energy efficiency and reducing carbon emissions; 3. Integrate rail, port and pipeline planning within Transnet; 4. Pursue alignment with national road and electricity supply planning; 5. Assume that operational efficiency is optimised first, then consider infrastructure-based capacity solutions; 6. Target rail suitable freight to shift from road-to-rail; 7. Benchmark internationally on world class handling services, new technologies and best practices; 8. Plan to improve South Africa s global competitiveness by reducing the total cost of freight transport and logistics; 9. Identify opportunities in Africa and leverage the economies of scale in global trade; and 10. Provide responsive infrastructure that meets South Africa s economic needs in line with the New Growth Path and the National Development Plan. It is important to understand that the LTPF is not constrained by fundability, affordability and commercial viability. It is also not concerned with the ultimate ownership and regulatory regimes to govern infrastructure ownership in the future. This approach is intentional and consistent with framework planning best practices. 9

11 5. THE TRANSNET PLANNING HIERARCHY Planning within Transnet occurs at various levels. While each level will address capacity planning in a different way, it is important to ensure that planning efforts are fundamentally aligned and aim towards the same future objectives. The LTPF provides an important link between national and provincial masterplans and policy; and the corporate strategy or MDS. The influence goes both ways in that the LTPF both informs and reacts to both levels of planning. LEVEL 1: NATIONAL AND PROVINCIAL PLANNING The planning frameworks typically associated with this level include the National Development Plan, National Transportation Masterplan (NATMAP), the Presidential Infrastructure Coordinating Commission Strategic Integrated Projects (PICC s SIPs) and a variety of provincial and local masterplans. The focus of these plans are typically developmental and may span as far as 50 years into the future. Transnet formally interacts with the associated planning structures and in many cases assists in formulating plans or provide essential inputs for planning. There are also many informal or ad hoc interactions with stakeholders who assist in formulating the LTPF or see the LTPF as a source of information. LEVEL 2: LONG-TERM PLANNING FRAMEWORK The LTPF is produced annually by Transnet Group Capital, with support from both the operating divisions and key external stakeholders. It provides the business and broader stakeholder community with a planning framework within which the long-term development of South Africa s freight transportation network and the expansion of Transnet s operational footprint can be executed. The LTPF is clearly an important input to the Transnet Corporate Plan. It uses an aligned (not matched) seven-year and an unconstrained 30-year view of demand. It is therefore a framework to guide strategic investment decisions and offers a neutral view on capacity requirements not impacted by affordability, profitability and other business constraints. The LTPF and Corporate Plan will thus inevitably differ. LEVEL 3: TRANSNET CORPORATE PLAN Transnet s Corporate Plan is prepared on an annual basis and is approved by the Transnet Board. The Corporate Plan: Aligns the defined strategy, objectives and plans with the requirements of the Shareholder as agreed in the Shareholder s Compact; and Outlines Transnet s strategy, objectives and plans, and details the initiatives that will be implemented to achieve the Company s strategic objectives, thereby enabling it to deliver on its mandate in the next financial year as well as the following six years. The preparation of the Corporate Plan follows a robust and structured process involving, inter alia, the Board of Directors and the Group Leadership Team of Transnet, and flows from a culmination of various activities, initiatives and processes within Transnet. Figure 3: Planning Hierarchy 10

12 6. THE TRANSNET PLANNING CYCLE Figure 4 illustrates the planning cycle and the alignment that occurs in the process. This process extends over an entire financial year. 1st quarter: April June Align freight demand with Corporate Plan. Long-Term Planning Framework is completed and published. 2nd quarter: July September Receive demand updates from several sources and process. Publish unconstrained demand for next planning cycle. Develop early capacity options for port, rail and pipeline development based on unconstrained demand. Update the installed capacity of port, rail and pipeline networks. 3rd quarter: October December 4th quarter: January March OD engagement on demand target setting and alignment. OD engagement on unconstrained capacity plans and capital budgeting. Develop unconstrained capital investment requirements. Finalise unconstrained content chapters towards LTPF draft. Compile the final draft of LTPF and circulate to internal stakeholders. Analysis of capital submissions in Corporate Plan vs. LTPF seven-year plan to ensure alignment. Initiate next demand update cycle. Figure 4: Planning Process Alignment 7. THE LTPF 2016 A brief description of highlights in the various chapters are given below Rail Development Plan The rail development plans include new elements of service reliability; while rolling stock models have been upgraded and refined to provide a better representation of journey times, dwell times and turnaround times. The corridors have been considered as end to end solutions, thus aligning main line upgrades with train handling requirements at the endpoints Port Development Plan Highlights of the port chapter include an overview of potential new port sites along South Africa s coast, a sustainable response for future port development, interesting new emerging and upcoming technologies, a revision to Durban s container capacity planning, as well as a more comprehensive assessment of import options for natural gas through the port system Pipeline Development Plan The pipeline chapter includes highlights such as identified new pipeline, terminal and storage investment opportunities in South Africa. A key highlight is also the improved planning across the liquid fuel system, from better engagement with key stakeholders such as Government, oil majors and Historically Disadvantaged South Africans (HDSA) players. 11

13 1.14 Africa Transport Demand and Infrastructure Planning The Africa chapter includes an assessment and ranking of rail, port and pipeline projects on the continent, indicating the appetite Transnet would have for specific projects. Information was also extracted on complementary opportunities to South African operations by developments elsewhere on the continent Gas Infrastructure Planning Highlights in the gas chapter include an update to the fast-evolving gas energy landscape, drivers for natural gas use, as well as Government initiatives. The chapter includes a new section on potential port and pipeline infrastructure required to import and distribute gas in South Africa, including Floating Storage and Regasification Units (FSRUs), power barges and land-based gas power generation Capital Planning The capital planning chapter includes an analysis to illustrate how the rolling 30-year plans have evolved over the last few years, in-line with global and domestic economic expectations. An analysis was also added to show the possible long-term capital requirements of the Presidential Infrastructure Coordinating Commission s (PICC) associated Strategic Integrated Projects. The gas infrastructure requirements were also singled out as an independent commodity although the details of these projects are included as part of the port and pipeline infrastructure requirements. 12