AG's office casts doubt on Transnet's ability to deliver on turnaround strategy

CAPE TOWN - The Auditor-General’s office has cast doubt on Transnet’s ability to deliver on its turnaround strategy given its high liabilities, burgeoning debt and a mammoth maintenance backlog. 

The freight rail agency has posted a R7.3 billion loss for the 2023/24 financial year, posing a further risk to whether it can be deemed a going concern. 

Presenting the company’s latest financials to Parliament’s Standing Committee on Public Accounts (SCOPA) on Wednesday, the Auditor-General’s office said little had been achieved to address the problems highlighted in previous audits.

On Friday, Transnet took on another R5 billion loan from the BRICS bank. 

But the Auditor-General’s office said its heavy reliance on debt and limited funds for infrastructure maintenance was cause for concern. 

With total borrowings of R136 billion, senior audit manager, Lindiwe Ndala, questioned whether Transnet would be able to repay its debt.

"There are some material uncertainties regarding the entity’s ability to continue as a going concern, and we have raised a material uncertainty as part of our audit report overall."

The poor management of its security contracts means vandalism and theft are costing the company over R2 billion a year. 

It also currently has an infrastructure maintenance backlog of over R6 billion that it won’t be able to catch up until 2030. 

"This, in itself, has had an impact on Transnet being able to fully service the customers due to the limitations that they would have had overall due to non-maintenance of the infrastructure."

The Auditor-General has also flagged concern over the accuracy of Transnet’s asset register, saying that not all of it had been recorded.