South Africa’s National Treasury said on Friday it has issued state-owned rail and ports firm Transnet a support package of 47 billion rand ($2.5 billion) to help with a recovery plan, which includes meeting its immediate debt obligations.
“The financial support package provided for the entity is a 47 billion rand guarantee facility against which Transnet will drawdown an initial amount of 22.8 billion rand to deal with immediate liquidity matters such as settling maturity debt,” the National Treasury and the Department of Public Enterprises said in a joint statement.
Transnet has been struggling to provide adequate freight rail and port services due to equipment shortages and maintenance backlogs after years of under-investment. The logistics utility’s underperformance has impacted commodity exports and other sectors such as manufacturing and retail, weakening Africa’s most advanced economy.
The company, which has a 130 billion rand debt and recorded a loss of 5.7 billion rand in the financial year to March, has seen freight volumes decline to 150 million metric tons in financial year 2022/23 from 226 million tons in the 2017/18.
Transnet’s new board is pursuing a recovery plan which seeks to restore freight volumes and return the company to profitability over the next 18 months. The turnaround plan includes splitting the freight rail subsidiary into two – an infrastructure management company and an operating unit.
The company is also targeting reduced port backlogs and will make another attempt to open up parts of its rail network to private operators after last year’s false start.
Transnet on Oct. 26 said it had requested funding from government, reported to be around 100 billion rand, including an equity injection, to help fund the recovery efforts.
Source: CNBC
