Transnet battling to cover debt, improve operational performance
The rail, freight and port agency is spending R1 billion a month to service its R130 billion debt.
Transnet GCEO, Michelle Phillips, before the Standing Committee on Public Accounts (SCOPA) in Parliament in Cape Town on 10 September 2024. Picture: Lindsay Dentlinger/EWN
CAPE TOWN - Transnet says it’s struggling to make enough money to cover its debt and to improve its operational performance.
The rail, freight and port agency is spending R1 billion a month to service its debt.
Transport Minister Barbara Creecy and group CEO, Michelle Phillips, have on Tuesday been before Parliament’s Standing Committee on Public Accounts (SCOPA), to discuss the company’s finances, following a more than R7 billion loss in the past financial year.
Former Transnet CEO Brian Molefe challenging Phillips on claims that many of the problems currently experienced are as a result of lack of maintenance and contracts entered into during the “state capture years”. LD pic.twitter.com/YziEpgZJv6
— EWN Reporter (@ewnreporter) September 10, 2024
They say a multi-billion rand restoration of the rail network is needed to get freight volumes back to peak levels reached in 2018.
Creecy says Transnet’s freight movement has plateaued, and it urgently needs to reach its 250 million tonne annual freight target.
She says that the current situation is of deep concern to her and the business sector.
"What I’ve shared with the board and the Annual General Meeting that took place last week Monday, is that that can’t be achieved in the distant future. That needs to be achieved sooner rather than later."
The entity was granted a new R5 billion BRCIS Bank loan last month to get its operations back on track.
But group CEO Michelle Phillips says the company’s R130 billion debt is strangling operations.
She says at least R51 billion will be needed over the next five years to meet the maintenance backlog.
“You can’t have a situation where one - you have a performance issue, you are failing to maintain your network, you are not getting in equipment at the right rates, but you have a debt burden that you consistently have to be redeeming.”
Creecy hopes to finalise a framework for third-party participation in the rail network by the end of the year.