The Economic Regulation Of Transport Act

Commencement of the Economic Regulation of Transport Act.

On 6 June 2024, the President of the Republic of South Africa signed the Economic Regulation of Transport Act, 2024 ("ERT Act") into law.

The ERT Act is a transformative piece of legislation that creates an integrated system of the economic regulation of the South African transport sector by i) establishing a Transport Economic Regulator and Transport Economic Council to regulate various transport modes and ii) making consequential amendments to a suite of Acts in the transport sector.

Key changes introduced by the ERT Act include:

1. the ability of the Transport Economic Regulator to control pricing across the transport sector, akin to the function of the National Energy Regulator of South Africa in the energy sector; and
2. the introduction of provisions governing third party access to rail infrastructure by private sector participants, such as train operating companies in South Africa.

The History And Future Of Economic Regulation Of Ports

In terms of the National Ports Act, 2005, all of South Africa's commercial ports are regulated by the Ports Regulator. The Ports Regulator has the following functions in terms of the National Ports Act, which include, but are not limited to:

1. exercising economic regulation of the ports system in line with government's strategic objectives;
2. promoting equity of access to ports, facilities and services provided at South Africa's ports; and
3. monitoring the activities of the Transnet National Ports Authority ("TNPA") (the service provider at South Africa's ports) to ensure that it performs its functions in accordance with the National Ports Act.

One of the Ports Regulator's core responsibilities is to approve the tariffs for all services provided by the TNPA at South Africa's ports. It is through the Ports Regulator's functions, and other criteria, that the Ports Regulator evaluates the tariffs proposed by the TNPA. Both the functions and the lens through which the Transport Economic Regulator shall evaluate tariffs for all the services provided by TNPA in terms of the ERT Act differs from the status quo.

In terms of the ERT Act, the Transport Economic Regulator shall be responsible for regulating South Africa's ports. The Transport Economic Regulator replaces the Ports Regulator under the National Ports Act. The Transport Economic Regulator retains several functions of the Ports Regulator, but, crucially, has been provided with additional functions which take a significant step towards liberalising South Africa's ports sector. The functions of the Transport Economic Regulator envisaged under the ERT Act, include, but are not limited to:

1. regulating the provision of adequate and efficient transport facilities and services;
2. promoting efficiency in transport facilities and services by facilitating competition, where possible, and implementing regulations;
3. promoting appropriate, adequate and efficient investment in transport facilities and services;
4. researching market structures and service delivery to determine whether or not particular entities, markets, facilities or services within the transport sector are functioning competitively; and
5. conducting market inquiries.

The History and Future of Economic Regulation of Rail

The ERT Act equally marks a pivotal shift in South Africa's rail sector. Historically, the Transnet Rail Infrastructure Manager ("TRIM") held exclusive authority over the tariff calculation process and access to the rail network in the absence of a single legislative framework that regulated tariff determination and third party access to the network.

To address TRIM's monopoly and introduce regulatory oversight, the Interim Rail Economic Regulatory Capacity ("IRERC") was established by means of a Memorandum of Understanding entered into between the Minister of Transport and the Minister of Public Enterprises to develop the area of economic regulation pending the formal creation of the Transport Economic Regulator, under the ERT Act.

In terms of the ERT Act, regulated entities such as Transnet Freight Rail are required to submit proposals to the Transport Economic Regulator to request approval of price control for facilities and services offered by the entity. In contrast to the previous position on tariff determination in the rail sector, proposals from regulated entities are now required to outline proposed tariffs, fees and charges which the Transport Economic Regulator may approve with conditions or reject and or request for a new proposal.

Chapter 2 of the ERT Act, in particular, is anticipated to be impactful for the private sector by fostering third party access through access agreements and investment in rail infrastructure, which previously was not regulated or housed under one piece of legislation, regulation or policy.

The Economic Regulation of Transport Amendment Bill

In October 2024, the Portfolio Committee on Transport, following a formal request to the National Assembly, received approval to introduce an amendment to the ERT Act through the Economic Regulation of Transport Amendment Bill, 2025 ("Amendment Bill").

The purpose of the Amendment Bill is to correct a clerical error in Schedule 1 of the ERT Act, which incorrectly cites references to the legislation as the "Economic Regulation of Transport Act, 2020" instead of the "Economic Regulation of Transport Act, 2024".

The Amendment Bill is currently under consideration by the National Council of Provinces ("NCOP") for concurrence. The Select NCOP Committee on Public Infrastructure and the Minister in the Presidency have invited the public to provide comments on the Amendment Bill by no later than 1 December 2025.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.