SOUTH Africa’s National Treasury agreed to provide a R47bn guarantee facility to Transnet, the beleaguered rail and ports operator, said Bloomberg News.
Citing a Treasury statement on Friday, the newswire said Transnet will be able to access R22.8bn immediately. Transnet will have to meet “strict guarantee conditions” for the rest of the funds, according to the statement.
The guarantee will enable Transnet to raise new debt, which would not be possible without it, said News24. The Treasury decided not to provide Transnet with an equity injection because the budget for 2023/24 was closed, it added.
Last month, the board of Transnet issued a turnaround plan that requires a R47bn equity injection and R61bn of debt relief, said News24.
Said the Treasury: “The financial support package provided for the entity is an R47bn guarantee facility against which Transnet will draw down an initial amount of R22.8bn to deal with immediate liquidity matters such as settling maturing debt.
“The government has not considered an equity injection given that the budget for 2023/24 is closed and is confident that the guarantee facility alongside swift implementation of the Transnet Recovery Plan will be sufficient to resolve Transnet’s challenges.”
Inefficiencies at Transnet have prompted companies to cut thousands of jobs to reduce costs after failing to ship commodities and other goods, said Bloomberg News. Transnet had requested an equity injection from the state, as its R130bn debt pile means it’s unable to fund itself in capital markets. It also needs money for a turnaround plan to increase exports that are vital for the economy.
The state rail and port company’s performance has deteriorated rapidly over the past decade as corruption and mismanagement during the administration of former President Jacob Zuma took their toll, followed by pandemic-induced losses.
A surge in infrastructure theft and restrictive graft-prevention measures by the Treasury deepened the malaise.
Transnet Freight Rail, a division of Transnet, said on Thursday it was ramping up coal trains along its North Corridor in order to ease port congestion which has crippled operations at Richards Bay port.
The improved service will see seven trains per week for its coal service by mid-December bringing the the total number of trains to 28 per week.
“This equates to volume of about 15,400 tons per week, and an annualised tempo of 739,200 tons per annum, which is equivalent to 452 road truck trips per week, and 21,747 road truck trips per annum,” said
The first four locomotives will be deployed over the next few days. Between December 2023 and March 2024, TFR will bring in an additional seven trains, resulting in 35 trains per week to the port. This will support efforts underway to decongest the port, it said.
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