Finance Minister Enoch Godongwana has provided Transnet with a R47 billion guarantee facility to support the state logistic company’s recovery plan.
Godongwana said the state owned company had to use the money to meet its immediate debt obligations.
Godongwana delivered the 2024 Budget on Wednesday.
According to the National Treasury Budget Review, Transnet can only use this guarantee if they continue to implement their comprehensive turnaround plan, that has been approved by the board of directors.
Government said it was working closely with Transnet to make sure it implements the changes needed to improve operational efficiencies at the entity and achieve financial sustainability.
Transnet must address the persistent challenges relating to liquidity and supply chain backlogs in order to utilise government’s guarantee facility.
Godongwana said like Eskom, the financial guarantee conditions require Transnet to focus on its core activities, and for the entity to introduce private sector partnerships to improve sustainability and support the implementation of the Freight Logistics Roadmap in December 2023.
He said the Freight Logistics Roadmap in December 2023 was approved by Cabinet to address the country’s increasingly unreliable logistics system.
The roadmap outlines immediate steps needed to improve port equipment, locomotive availability and network security. It also sets out a clear plan to enhance efficiencies, facilitate the introduction of competition and to leverage the financial as well as the technical support of the private sector.
In this regard, Godongwana announced that third-party access to the freight rail network will be introduced by May 2024.
Godongwana said that in ports, a private partner has been secured to upgrade Pier 2 of the Durban Container Terminal.
The upgrade should increase private investment in equipment, enhance technological capability and improve operational efficiencies.
In the budget review, Treasury noted that Transnet is expected to finalise its partnership with the private company by April 2024 to upgrade Pier 2.
Treasury noted that the Port of Durban handles 46% of SA’s port traffic, and this venture will increase private investment for equipment, technological capability and higher operational efficiency.
Transnet losses
National Treasury also noted that Transnet reported a net loss of R5.7 billion for 2022/23.
The state entity does not have the ability to generate sufficient cash from operations and has seen “total borrowing increase from R122.6 billion at end-March 2018 to R131.8 billion by end-December 2023”.
Additional reporting by Vernon Pillay
IOL Business