3 days ago
Transnet secures nearly R95bn in fresh government guarantees
The government will give Transnet an additional R94.8bn guarantee facility to support the ailing state-owned logistics firm's recovery plan, the transport ministry said on Sunday.
The facility comes on top of a R51bn guarantee the government announced for Transnet in May, including R41bn to cover the company's funding needs over the 2025/26 and 2026/27 financial years, and R10bn earmarked for debt servicing and capital investments.
The new guarantee comprises R48.6bn to cover all debt redemptions over the next five years, and an additional R46.2bn to mitigate against further credit rating actions, the ministry said in a statement.
The government is supporting Transnet's five-year turnaround strategy, which seeks to restore freight rail volumes to 250-million metric tons per year by the end of the period. The volumes fell to 152 million metric tons in the 2023/24 financial year, from a peak of 226 million metric tons in 2017/18.
Transnet has failed to deliver reliable freight rail and port services due to equipment shortages and maintenance backlogs after years of under-investment. Its capacity has been further constrained by widespread cable theft and vandalism.
The company's debt has risen to R145bn from R138bn at the end of the 2023/24 financial year, according to its chairperson Andile Sangqu. Its loss widened to R7.3bn in 2023/24, from R5.7bn the year before .
Transnet's struggles have cost mineral exporters, primarily coal and iron ore producers, billions in lost revenue. The exporters account for nearly 70% of Transnet's freight volumes.
Due to a lack of railway capacity, most chrome exports now reach ports by road, raising costs, damaging roads and the environment.
