Latest news with #R26.5
The Citizen
44 minutes ago
- Business
- The Citizen
Victory for Transnet: more cash incoming, union accepts salary increase
Transnet needs to repay R99.6 billion. South Africa's struggling state-owned logistics company, Transnet, has gone from being warned that it might run out of money in the next months to securing millions of rands in support from the government. The troubled state ports and freight railway operator went from facing threats of a massive strike that would cost it billions in lost operations to getting the union representing most of the workers to stand down and accept the salary increase offer on the table. Weeks after receiving approval of R51 billion guarantee support from the Minister of Transport, Barbara Creecy, another financial commitment has been made. More money for Transnet Creecy said on Thursday that Transnet will receive additional guarantees to settle all its outstanding debt and execute its capital-investment programme. The department of transport will give an update on the additional support after the process has been finalised on 25 July 2025. Transnet needs to repay R99.6 billion. 'The government will monitor the performance of Transnet to ensure it provides adequate support to it as it implements the reforms required by the government,' said the department. ALSO READ: Government delivers R51 billion support to Transnet. Will it last? Transnet's 2023 financial guarantee In 2023, Transnet was given a R47 billion guarantee to support the entity in meeting its debt obligations, the same reason being offered two years later. The government's decision to offer Transnet support may be prompted by Moody's Ratings Agency's warning in May that the entity would run out of money in less than three months, unless bailouts are provided. Challenges at the troubled entity stem from a lack of infrastructure maintenance, inadequate investment in necessary infrastructure and a lack of focus on generating revenue. Despite improved support since 2023, Moody's said progress remains slower than planned, to some extent due to the continued high occurrence of theft, vandalism and adverse weather conditions. Transnet's debt burden remains excessively high, resulting in unsustainable interest payments. World Bank loan Earlier in the week, the World Bank announced it had approved a $1.5 billion (about R26.5 billion) loan, the bulk of which is expected to be directed towards reviving Eskom and Transnet. The bank said the objective of the freight transport sector reforms is to support the government's efforts to transform the sector's structure from a public monopoly to a competitive market. At the heart of the reform is unbundling the struggling Transnet. 'To build the legal and institutional foundations required for transforming the sector, the authorities have focused their attention on establishing an independent transport economic regulator to ensure fair and open access to private operators and unbundling Transnet to allow for train operators to enter the market.' ALSO READ: Transnet opens bidding for Durban multi-purpose terminal concession Massive strike Transnet received threats from the union representing most of its workers, the United National Transport Union (Untu), that it does not mind bringing the sector to a standstill if its members do not receive a salary increase they deserve. On Thursday afternoon, the union announced that it has accepted the increase proposed by Transnet, as expressed by its members. 'As the majority union representing the voices of more than 26 000 employees at Transnet, Untu confirms that this newly signed agreement supersedes the previous agreement signed between Transnet and the minority union, South African Transport and Allied Workers Union (Satawu).' Salary increase Transnet had initially proposed a salary increase of 6% this year, 6% in 2026 and 5.5% in 2027, while Untu was requesting a 10% increase. Satawu accepted the initial proposed offer. Due to the Commission for Conciliation, Mediation and Arbitration (CCMA) intervention, a new offer was made, a three-year agreement that will commence on 1 April 2025 and will end on 31 March 2028. Each year, all Transnet employees will receive a 6% increase. This is the offer Untu ended up accepting. The union said the agreement 'places a strong emphasis on job security by including a firm non-mandatory retrenchment clause'. Additionally, Untu members will receive back payment for the increase from 1 April 2025, as they were not eligible for the increase when Satawu members received it. NOW READ: SA's poor service delivery linked to almost R500 billion spent on SOE bailouts
The Citizen
a day ago
- Business
- The Citizen
R26 billion rescue from World Bank: Can the loan save Eskom and Transnet?
The bulk of this funding will be directed toward reviving Eskom and Transnet. South Africa's energy and logistics sectors are struggling under the weight of neglect and mismanagement, unable to deliver their full potential. Years of poor maintenance and underinvestment have left critical infrastructure in a state of disrepair, rendering two of the country's most vital systems sources of national frustration. The National Treasury requested support from the World Bank to restore former glory in these sectors. Earlier this week, the World Bank announced it has approved a $1.5 billion (approximately R26.5 billion) loan. The bulk of this funding will be directed toward reviving Eskom and Transnet. This assistance is provided through the bank's Development Policy Financing (DPF), which provides non-earmarked funds for development policy operations (DPO). ALSO READ: 'Sad situation': Eskom warns growing municipal debt seriously risks its sustainability How will the loan help? The World Bank said the loan will contribute to inclusive growth and job creation in the country. The World Bank offers DPOs to help governments achieve sustainable development through a programme of policy changes and institutional actions, such as improving the investment climate, addressing bottlenecks to enhance service delivery, diversifying the economy, and strengthening public financial management. 'South Africa faces a deepening jobs and growth crisis. Structural barriers, including weak governance, limited competition, and skills shortages, have slowed progress. Infrastructure services have declined: in 2023, power outages cut GDP by 2% and cost 500 000 jobs, while rail and port inefficiencies reduced exports by around 20%.' Loan to support Eskom A portion of the loan will support the government's objective to provide a reliable, affordable, and sustainable electricity supply for South Africans by making the power sector more efficient and competitive. 'The primary goal is to transition from a single, state-owned monopoly [Eskom] to a more open and competitive electricity market, where various providers can generate, transmit, and distribute power more efficiently. 'This transformation is critical, following years of electricity shortages and load shedding, which peaked in 2023, severely affecting the economy and people's lives,' said the World Bank. ALSO READ: Government delivers R51 billion support to Transnet. Will it last? Loan to support Transnet The objective of the freight transport sector reforms is to support the government's efforts to transform the sector's structure from a public monopoly to a competitive market. At the heart of the reform is the unbundling of the struggling Transnet. 'To build the legal and institutional foundations required for transforming the sector, the authorities have focused their attention on: establishing an independent transport economic regulator to ensure fair and open access to private operators, and unbundling Transnet to allow for train operators to enter the market. 'These two reforms are required to create a level playing field between Transnet and potential private operators, paving the way for more efficient, affordable, and climate-resilient transport services.' Transnet's potential The World Bank noted that the reforms aim to increase rail network capacity from 25% in 2023 to 65% by 2027, enabling the entry of at least four private operators. 'Just transition measures are expected to mobilise $750 million in grants and provide jobs for nearly 10,000 workers, including women, in communities affected by the energy transition. 'Together, these reforms could boost short-term GDP growth by 1% and 2–3% over the medium term, with up to 250 000 jobs created by 2027 and 500 000 by the early 2030s.' NOW READ: Medium-term budget: Finance Minister Enoch Godongwana's debt warning
IOL News
2 days ago
- Business
- IOL News
City of Tshwane saves millions by insourcing construction services
The City of Tshwane will save millions of rand in architectural fees by outsourcing these services for projects like the building of the Lusaka Clinic in Mamelodi. Image: Supplied In a bid to save the City of Tshwane millions of rand, the multiparty Mayoral Committee has approved a proposal mandating all city construction projects to utilise the city's internal professional services, which are part of the Physical Development Services section within the Department of Economic Development and Spatial Planning. 'The insourcing of these services for new building design projects, alterations, additions, and as-built documentation has already begun to save the City of Tshwane millions of rand in fees that would otherwise have been outsourced,' Councillor Sarah Mabotsa said. She added that the Physical Development Services of the Department of Economic Development and Spatial Planning is staffed by qualified architectural professionals, quantity surveyors, and building works inspectors. They are equipped to manage projects from inception through to completion. She explained that until now, some city departments have contracted these services externally, resulting in high consultant costs for the city and often leading to inconsistent quality and misalignment with city-wide standards. 'By insourcing these services, the City of Tshwane will reduce expenditure and also ensure standardised project quality and protect municipal interests,' Mabotsa said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading According to her, savings of about 10% to 20% on external consulting fees are typically achieved on smaller projects of up to R500,000 in value, and on larger projects (of R20 million or more), savings are usually between 7% and 15% of the project cost. 'This insourcing has already saved the city R16.6 million on recent projects. The initiative to mandate insourcing of these services going forward will save the city many more millions,' she said. For the projects of the Stinkwater Social Development Centre (a R51 million project), Gazankulu Clinic (a R26.5 million project), Rayton Clinic (a R24 million project) and the Soshanguve Clinic (a R18.5 million project), architect fees of R3.6 million, R1.9 million, R1.7 million and R1.5 million were saved on each project respectively. Other projects under way or in planning, which the Physical Development Services section is assisting with, like the R50 million Mabopane Social Development Service and R61 million Lusaka Clinic, will see savings in architectural fees of R3.5 million and R4.4 million respectively. 'Doing our work faster and at less cost to ratepayers means that we reduce our spending and can do more with our available budgets,' Mabotsa said.
