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South Africa’s embattled state-owned freight-rail and ports company identified areas requiring immediate state support in a turnaround plan being submitted to the government.
Transnet’s board plans to meet the Ministry of Public Enterprises and the Ministry of Finance this week to discuss the plan, it said in an emailed statement on 14 October.
The company said once approved by Public Enterprises Minister Pravin Gordhan’s department, it will be discussed with labour unions, employees, customers and lenders.
A R505 billion cost burden
Last week, a plan was submitted to the presidency setting out ways to reverse the collapse of Transnet, which has cost Africa’s most industrialised economy R505 billion ($26.7 billion) since 2010.
Volumes of iron ore and coal shipped through the company’s freight rail network for export have dropped because of vandalism, idle locomotives and cable theft.
The government has begun talks with the World Bank for a $1 billion loan to upgrade Transnet’s rail infrastructure and support state power utility Eskom’s transmission unit, Johannesburg-based newspaper Business Day reported.
According to the statement, Transnet’s turnaround plan sets out operational and financial initiatives that must be implemented over the next six, 12 and 18 months to stabilise the business.
It’s prioritised filling three executive positions following the resignations of its chief executive officer and head of its freight-rail division earlier this month. Former Chairman Popo Molefe also quit the board last week.
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Competition over privatisation
A Turnaround Talk article points out that while existing policy – such as the White Paper on the National Rail Policy and the National Commercial Ports Policy – seeks to drive reform of South Africa’s logistics sector, Government’s freight logistics roadmap aims to enhance collaboration across various entities to accelerate the implementation of identified solutions.
“It allows a clear path to address immediate challenges in the short term and the reform of the logistics system in the long term. And this is built on the existing policy decisions that Cabinet has already made,” Rudi Dicks, Head of the Presidency’s Project Management Office told the briefing.
“So, it’s not new. It’s developing an inability to implement what we’ve already decided.”
The article adds that the officials emphasised that while the draft plan – and the policy from which it draws – seeks to encourage greater private sector participation, this does not equate to privatisation.
“It’s not about privatisation. But it’s creating more competition and investment in the various spaces where Transnet participates,” said Dicks.
“The roadmap reinforces our position that these are strategic national assets. We own the infrastructure.”
