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The Citizen
22-05-2025
- Business
- The Citizen
Is Transnet another Eskom? Government to offer financial support
Transnet's profits declined from R5 billion in 2019 to a net loss of R5.7 billion in 2023, and in 2024, it carried a staggering debt burden of R120 billion. Which means it was R1 billion per month to service its debts. Many state-owned enterprises (SOEs) rely on the government as a constant safety net, stepping in with financial support whenever things fall apart, just like teenagers counting on their parents to fix their mess. But unlike some parents, who eventually say 'enough is enough' and teach tough love, the government keeps bailing SOEs out. Will it ever stop? How else will SOEs learn to stand on their own? The cash-strapped logistics company Transnet is increasingly resembling Eskom — South Africa's bulk electricity supplier — as it continues to rely on government financial support. ALSO READ: Budget 3.0: not austerity budget, but a redistributive budget Transnet to be bailed out Finance Minister Enoch Godongwana delivered the third budget speech on Wednesday in Cape Town, where he said little to nothing about lending a hand to struggling SOEs. The only struggling SOE he mentioned was Transnet, which government is considering providing financial support to. 'The government will also consider government guarantee support to Transnet, to enable the entity to refinance maturing debt, and to enable the execution of its capital investment programme,' said Godongwana. The South African Broadcasting Corporation (SABC) is another struggling SOE that the public expected the minister to mention after it reported being technically insolvent. Transnet in trouble Moody's Ratings Agency recently reviewed Transnet for a downgrade last week, as it believes the cash-strapped entity might run out of money within the next three months. This view supports the notion that the government should provide additional support to the embattled entity. This additional support can be used to refinance upcoming debt maturities and secure funds for its expanded capital expenditure programme. 'We believe the government remains supportive of Transnet and will provide additional guarantees or other assistance to prevent default on its upcoming debt maturities. However, the lack of a formal announcement so far creates uncertainty and heightens default risk,' said Moody's. Recovery plan Transnet's profits declined from R5 billion in 2019 to a net loss of R5.7 billion in 2023. In 2024, it carried a staggering debt burden of R120 billion, which means it was R1 billion per month to service its debts. Therefore, the company had to develop a recovery plan, which CEO Michelle Phillips believed would meet its 170 million tonne target by the end of its financial year. In 2024, she said she has always been clear that Transnet, under her leadership, will never ask the government for a bailout. 'In my tenure at Transnet, we were always very clear that we would not approach government for a bailout to ensure that we are never a drain on the fiscus.' ALSO READ: 'It's been two and a half years, and the case hasn't started': Transnet corruption trial to start in 2026, 70 witnesses to testify What went wrong? Transnet's challenges are due to a lack of maintaining infrastructure, failure to invest or under-investment in necessary infrastructure and not focusing on generating revenue. Moody's acknowledged that Transnet's operational performance has improved under the recovery programme launched at the end of 2023. However, progress remains slower than planned, to some extent due to the continued high occurrence of theft, vandalism, and adverse weather conditions. However, Transnet's debt burden remains excessively high, resulting in unsustainable interest payments. Bailouts result in poor service delivery In late 2024, the Standing Committee on Appropriations was informed by Treasury that poor service delivery was attributed to the decision to bail out struggling state-owned enterprises (SOEs). SOEs have received R456.5 billion of taxpayers' money in bailouts for nine years. By the end of the current financial year, this amount is expected to increase to R520.6 billion. The bulk of that money went to Eskom. By the 2025/2026 financial year, the power utility would have received R496 billion in bailouts since 2008/2009. The power utility is owed billions by private and public entities, municipalities, and government departments. Government guarantee or bailout In the budget speech, Godongwana did not specify whether Transnet will receive a government guarantee support or a bailout in this current financial year. In 2023, the Government awarded Transnet a R47 billion guarantee as part of its involvement and commitment to the recovery and transformation of the SOE. 'The R47 billion is a guarantee which will merely allow Transnet to borrow more money,' said Phillips. What is Transnet? Transnet is the largest freight logistics chain in South Africa, delivering goods. The entity delivers thousands of tons of goods throughout the country, via its pipelines and to and from its ports. It moves cargo onto ships for export while unloading goods from overseas. There are Transnet Freight Rail, Transnet Rail Engineering, Transnet National Ports Authority, Transnet Port Terminals, and Transnet Pipelines. In 2023, it was estimated that Transnet's performance would negatively impact South Africa's economy, with studies estimating a loss of around 5% of GDP. This translates to a potential GDP loss of approximately R353 billion, or around R1 billion per day, due to inefficient logistics and increased transport costs for businesses. NOW READ: Are threats against Transnet over? CCMA sends revised offer to halt strike
IOL News
17-05-2025
- Automotive
- IOL News
Is the SABC introducing car radio licence fees? The truth behind the disinformation
The South African Broadcasting Corporation (SABC) has labelled social media reports about a car radio licence fee as disinformation Image: Karen Sandison/IndependentNewspapers The South African Broadcasting Corporation (SABC) has labelled social media reports about a car radio licence fee as disinformation, aimed at causing panic among South Africans. This follows a fake statement that went viral on social media, falsely attributed to the SABC, claiming the broadcaster would introduce car radio licences due to a dramatic decline in TV licence revenue, exacerbated by the rise of streaming services like Netflix. In a statement issued to the media on Thursday, the public broadcaster expressed concern over the "fabricated and misleading media statement" and clarified that there is no directive or policy within the SABC supporting such a proposal. "The facts are the SABC has not issued any media statement or made any public pronouncement on a car radio licence fee. The SABC would like to refute this disinformation with the contempt it deserves, as there is no SABC directive or policy that aligns to this," the statement read. The public broadcaster stressed that the current TV licence system remains unchanged and applies only to television sets as per the Broadcasting Act 4 of 1999 and TV Licence Regulations (2004). "Any changes to this framework require legislative amendments and broad consultation." 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 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. Next Stay Close ✕ IOL previously reported that the streaming platform SABC Plus continues to gain momentum, with the public broadcaster announcing that it has reached one million registered users. The statement further stated that disinformation is aimed at causing panic and destabilising the SABC at a critical time. "This disinformation is aimed at causing panic and destabilising the SABC, at a critical time where the organisation is celebrating its 1 million subscribers on its OTT platform, SABC Plus" IOL Business Get your news on the go, click here to join the IOL News WhatsApp channel.
IOL News
16-05-2025
- Business
- IOL News
A Financial Crisis Looms for the SABC - Only 20% of Households are Paying
The South African Broadcasting Corporation (SABC) has reported that less than 20% of South African households are paying their TV licence fees. The South African Broadcasting Corporation (SABC) has reported that less than 20% of South African households are paying their TV licence fees. The public broadcaster shared this information while briefing the Standing Committee on Public Accounts (Scopa) on Wednesday, during a session focused on its audit outcomes and financial performance. SABC CEO Nomsa Chabeli told the committee that the cost of delivering the public broadcasting mandate remains significantly underfunded, forcing the organisation to rely heavily on commercial revenue. "It's important to note that when we have discussions about the SABC's financial sustainability, we remember the cost of the public mandate that is currently unfunded. The SABC, from a commercial perspective, takes commercial revenue to fund the public mandate that's our current model." Chabeli said.
IOL News
15-05-2025
- Business
- IOL News
Less than 20% of South African households pay TV licences, SABC warns of financial crisis
The South African Broadcasting Corporation (SABC) has reported that less than 20% of South African households are paying their TV licence fees. The South African Broadcasting Corporation (SABC) has reported that less than 20% of South African households are paying their TV licence fees. The public broadcaster shared this information while briefing the Standing Committee on Public Accounts (Scopa) on Wednesday, during a session focused on its audit outcomes and financial performance. SABC CEO Nomsa Chabeli told the committee that the cost of delivering the public broadcasting mandate remains significantly underfunded, forcing the organisation to rely heavily on commercial revenue. "It's important to note that when we have discussions about the SABC's financial sustainability, we remember the cost of the public mandate that is currently unfunded. The SABC, from a commercial perspective, takes commercial revenue to fund the public mandate that's our current model." Chabeli said.
IOL News
15-05-2025
- Business
- IOL News
Less than 20% of South African households pay TV licences, SABC warns of financial crisis
The South African Broadcasting Corporation (SABC) has reported that less than 20% of South African households are paying their TV licence fees. The South African Broadcasting Corporation (SABC) has reported that less than 20% of South African households are paying their TV licence fees. The public broadcaster shared this information while briefing the Standing Committee on Public Accounts (Scopa) on Wednesday, during a session focused on its audit outcomes and financial performance. SABC CEO Nomsa Chabeli told the committee that the cost of delivering the public broadcasting mandate remains significantly underfunded, forcing the organisation to rely heavily on commercial revenue. "It's important to note that when we have discussions about the SABC's financial sustainability, we remember the cost of the public mandate that is currently unfunded. The SABC, from a commercial perspective, takes commercial revenue to fund the public mandate that's our current model." Chabeli said.
