5 December 2023
The National Treasury has granted a state guarantee worth R47 billion to Transnet. However, the question from the private sector is whether the money will be wasted, as seen at other state entities.
The guarantee is effective immediately and is intended to help the struggling and debt-laden state-owned transport and logistics company address its financial challenges.
According to the Treasury, Transnet can now draw R22,8 billion from the facility, including managing its debt obligations of R135 billion.
However, the relief package is not a lifeline and, therefore, not the answer to Transnet’s requests for R100 billion from the government. Transnet had requested a lifeline similar to the one Eskom received before Enoch Godongwana, the Minister of Finance, rejected it.
The Treasury trusts that the guarantee provided will be sufficient to assist Transnet with its rescue plan.
Gavin Kelly, CEO of the Road Freight Association, says the loan guarantee is welcome but Transnet has received money from the Treasury before. “So, the question remains whether the management, operational outlook and control that have been needed for many years will finally take place.
“However, it has not happened before. Therefore, the question is whether it will suddenly become the case and whether the same will happen as with South African Airways, which, after many lifelines, could deliver few of the expected results.”
According to Kelly, the association is well aware of the deficiencies in infrastructure and equipment that need urgent attention but believes the bigger challenge is changing management and attitudes within Transnet.
“Funding Transnet is a step in the right direction, and we look forward to seeing how efficiency and changes will be implemented in the ports and railway network under Transnet’s control.”
Andrew Bahlmann, CEO of Deal Leaders International’s corporate and advisory division, says cynical people’s opinions about the “support package” for Transnet are irrelevant. “It is just in time for the festive season, and the reality is that there is no alternative. Transnet’s inability has a devastating impact on the economy and especially on the country’s vital export markets.”
He says the true Transnet crisis is more a management issue than a financial one. For example, the business and investment community will expect to see immediate improvements in the accumulations and delays at ports.
“The railway network will have to progress before there is a sense of whether the financial package was justified, rather than money being poured into a bottomless pit.”
Transnet starts making the right noises
Transnet announced on Thursday that progress has already been made at berth 2 in Durban, where working hours have been increased to address the backlog of ships at anchor.
Transnet also wants to place additional trains on the railway line to and from Richards Bay to alleviate the pressure trucks are placing on the port. Road chaos around the port due to the poor railway network has recently worsened.
The railway line is used to transport coal to Richards Bay. Transnet hopes to place four additional locomotives on the line so that less coal is transported there by trucks.
By mid-December, Transnet Freight Rail (TFR) wants there to be seven trains a week between Limpopo and Richards Bay.
