R51b approved for Transnet's ongoing debt struggles
FOLLOWING the Minister of Transport Barbara Creecy's announcement of a R51b guarantee facility to the country's struggling port and rails operator, Transnet will be refinancing its debt to continue operations for the foreseeable future.
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Effective immediately, the Department of Transport (DoT) explained in a statement that the guarantee facility serves to support Transnet's capital investment programme and to enable it to meet its debt obligations.
In its own statement, Transnet's media desk said the ports and rails operator has made significant strides in implementing rail and port reforms. 'In pursuit of enhanced partnership and collaboration, several key private sector participation transactions are being implemented. These 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,' it said.
Transnet remains optimistic it will be able to recover and restore its role in the country's economy.
The DoT maintains that Transnet's role in the local economy is vital, and in line with the government's goal of inclusive growth. It added that at the end of March, Transnet moved around 160 million tons of freight on its rail network.
The guarantee facility includes a R41b loan guarantee for funding over the next two years, and a R10b guarantee for managing cash flow involving debt-related payments and capital investments. It previously received a R47b guarantee facility just two years ago.
As of March last year, Transnet accrued R138b in debt. The company was placed on review by Moody's Ratings last week and warned that it will run out of money for operations and debt servicing without a government bailout.
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