Transnet gets R51 billion government guarantee boost to continue with recovery plan
Minister of Transport Barbara Creecy has this week approved a R51 billion guarantee facility for Transnet. The State-owned freight and logistics group plays a central role in the South African economy and the government's goal of inclusive growth.
Image: Supplied
Minister of Transport Barbara Creecy has approved a R51 billion guarantee facility for Transnet, effective immediately, in a bid to bolster the State-owned freight and logistics group.
This financial backing, which was granted with the concurrence of the Minister of Finance, aims to support Transnet's vital capital investment programme and assist the entity in meeting its debt obligations amidst ongoing reforms.
Transnet's significance cannot be understated; it serves as a cornerstone of the South African economy, playing a critical role in facilitating the government's goal of inclusive growth.
Currently, Transnet is undergoing a comprehensive reform programme designed to enhance its operational performance as it strives to address longstanding financial, operational, and governance challenges that have impeded its ability to deliver on its strategic mandate.
As part of its trajectory towards improvement, Transnet reported a successful record of transporting the equivalent of 161 million tons of freight on its rail network by March 2025.
Notably, the entity had also released its 2024/25 Network Statement by December 2024, which introduces private sector operators into the freight rail domain. Anticipation builds as announcements of the first successful bidders are expected to be made by the end of July.
In a continued effort to promote private investment, the Department of Transport issued a Request for Information (RFI) earlier this year for private investors focusing on five pivotal freight corridors and associated ports.
With the deadline for the RFI closing on 31 May, the department said Transnet was on track to issue Requests for Proposals by September, aiming to attract further capital while maintaining State ownership of the network.
To navigate immediate capital investment needs, Transnet has introduced project-based applications to the Budget Facility for Infrastructure. Additionally, collaboration is underway with National Treasury and the Presidency to formulate a joint funding policy aimed at facilitating swift capital improvements through private sector involvement in priority freight corridors.
The decision to grant this crucial guarantee facility resulted from ongoing discussions between National Treasury and the Department of Transport, recognising the progress Transnet has made.
The financial package, amounting to R41bn, is set to address the entity's funding requirements across the 2025/26 and 2026/27 financial years, complemented by a R10bn guarantee specifically allocated for liquidity management, focusing on the servicing of maturing debt and related capital investments.
This marks a continuation of support initiated in December 2023, when a R47bn guarantee support facility was announced, enabling Transnet to implement its Recovery Plan for the fiscal years 2023/24 and 2024/25. This plan has been pivotal in galvanising increased capital investments and enhancing liquidity for the entity.
A Guarantee Framework Agreement will formalise the responsibilities between the Department of Transport and National Treasury, establishing reviewable conditions for the guarantees. According to the department, any drawdowns by Transnet will be contingent on compliance with these conditions, which will centre on operational requirements and reforms in the logistics sector.
Creecy expressed her confidence that the additional financial support provided to Transnet will catalyse further improvements in operations and accelerate the reforms laid out in the Freight Logistics Roadmap. She said this bold move was seen as a significant step towards fostering a more efficient and robust infrastructure for South Africa's freight and logistics industry.
Meanwhile, Transnet welcomed the government guarantee facility to support its sustainability and long-term growth.
Transnet said the facility will enable it to refinance maturing debt and ensure the organisation's continued access to adequate resources and facilities to be able to continue its operations as well as fund the capital investment programme for the foreseeable future.
"It will also enable Transnet to focus on operational improvements and strategic reforms. In line with existing Guarantee Framework Conditions, Transnet has made significant strides in implementing rail and port reforms. In pursuit of enhanced partnership and collaboration, several key Private Sector Participation (PSP) transactions are being implemented," Transnet said in a statement.
"PSPs are a key element of the organisation's strategy to modernise its operations and infrastructure and grow the logistics sector for the benefit of the economy. With government's commitment to support its recovery and strong collaboration with customers and industry partners, Transnet is on course to recover and fulfil its strategic role in the South African economy."
BUSINESS REPORT
Visit: www.businessreport.co.za
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The South African
an hour ago
- The South African
Newspaper headlines from around the world - Thursday, 5 June 2025
Here are the stories that made headlines on the front pages of newspapers worldwide on Thursday, 5 June 2025. The New York Times front page reported that the G.O.P's bill would swell the U.S. debt by $2.4 trillion. The Wall Street Journal front page reported that spycraft and homegrown weapons powered Kyiv's surprise attack. The Hindustan Times' front page reported that the government has finally announced the long-postponed census. Daily Mail's front page reported that battle lines have been drawn over immigration. The Guardian front page reported that chaos fears arise over the return of winter fuel payments. If you wish to stay up-to-date – for FREE – on the latest international and South African news, then bookmark The South African website for all that plus the latest in the world of finance, sport, lifestyle – and more. Did we mention it was 100% free to read …?
The South African
an hour ago
- The South African
DSD briefs parliament on basic income support policy
The Department of Social Development aims to provide basic income support for citizens between the ages of 18-59. During a briefing with the Portfolio Committee on Social Development, DSD updated parliament on the progress of the development of the Basic Income Support Policy. 'Work on the policy has been ongoing, with the first draft of the policy having been presented to the Social Protection, Community and Human Development Cluster Cabinet Committee on 26 November 2024', said DSD spokesperson, Bathembu Futshane. The committee raised that more consultations were needed in order to discus the policy. It was further suggested that meetings should be held with internal stakeholders. The meeting would focus on the affordability of the policy and linkages of its proposed beneficiaries with economic opportunities. An interdepartmental workshop was held in order to communicate the directive of collaboration. According to Futshane, the workshop affirmed the need to link the policy's beneficiaries to other employment and sustainable livelihood opportunities. 'A follow up workshop will be held in June 2025. Followed by bilateral engagements with the Presidency, the Department of Labour and National Treasury', said Futshane. He said once the consultations are concluded, DSD will approach the SPCHD Cabinet Committee in the second Quarter of the 2025/26 financial year. They will request cabinet to consider the revised policy. Once the policy is approved, it will be published for public comments. Futshane said that in order to ensure stability during the consultation period, the department will consult National Treasury for the R370 Social Relief of Distress grant be extended. The grant will remain in place until the legislative process is complete. Beneficiaries will be protected from extreme poverty and vulnerability while they wait for the policy to come into effect. 'The Department, has for the interim, been granted an extension by the National Treasury to continue with this provision for the 2025/26 financial year', concluded Futshane. DO YOU THINK SOCIAL GRANTS ARE HELPING SOUTH AFRICANS OR ENCOURAGING A CULTURE OF LAZINESS? Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
IOL News
an hour ago
- IOL News
MTN, Turkcell legal wrangle over allegations of bribery continues
Turkcell is set to oppose MTN's bid in the Constitutional Court Image: supplied Turkish mobile network operator, Turkcel, is set to oppose MTN's bid in the Constitutional Court to appeal a recent ruling that will allow allegations of bribery against MTN to be heard in South Africa. MTN, Africa's largest mobile network operator, approached the Constitutional Court arguing that South Africa doesn't have jurisdiction to hear legal bids over alleged corruption in Iran, and the matter should be heard there. In April, the Supreme Court of Appeal (SCA) allowed Turkcell to present evidence alleging MTN committed bribery and corruption to overturn an Iranian GSM licence award. The SCA ruling marked the first time a South African court determined whether misconduct allegations abroad could be heard locally. On Thursday, Turkcell said it was opposing MTN's application to the Constitutional Court. In a statement, it said that this was 'in Turkcell's ongoing pursuit of justice for damages estimated at over $4.2 billion, stemming from allegations that MTN paid bribes to Iranian and South African officials to overturn a public tender awarded initially to Turkcell for a multi-billion-dollar GSM telecom license in Iran'. Should Turkcell be victorious in its defence of MTN's appeal, Turkcell can take its allegations of bribery to the Johannesburg High Court. Its previous bid, two years ago, failed with a finding then by that court that South Africa was not the correct geography to hear the matter. This is the decision that has been overturned through the SCA ruling. Turkcell's legal wrangle with MTN dates back more than a decade, when it initially approached the US courts in an action it later retracted, contending that MTN secured its 49% stake in a telecommunications licence in Iran through bribery. Turkcell said that the local 'case has significant implications for South Africa's stance on international bribery and corruption'. The Turkish operator argues that MTN paid off both Iranian and South African officials to overturn a public tender, which it lost to Turkcell, for a multi-billion-dollar opportunity to run an Iranian GSM telecom licence. MTN has denied these allegations, publicly stating that it has always 'maintained that the Turkcell litigation was without merit and has expressed confidence that it would successfully defend these proceedings'. In 2012, the UK's Lord Leonard Hoffmann released a report that exonerated MTN of any shady dealings in securing the licence. In part, the report stated: 'All the allegations are a fabric of lies, distortions and inventions.' Cedric Soule, counsel for Turkcell, said that MTN's reliance on this report, which its commissioned, is improper as 'the process that MTN put together lacked the independence, rigour and transparency of a judicial proceeding'. Soule added that 'the Hoffmann Committee failed to interview key witnesses, did not independently gather or assess evidence, and did not use independent counsel; its conclusions are therefore unreliable and irrelevant to the current proceedings'. MTN, however, has said that 'these claims were the subject of a comprehensive and independent investigation led by Lord Hoffmann, the findings of which did not support the allegations'. The Constitutional Court will now decide whether to grant the request for leave to appeal filed by MTN and the other defendants. Turkcell expects a decision within three months.
