By Lehlohonolo Lehana.
State owned Rail Company Transnet has secured a €300 million (R5.8 billion) loan from France’s development bank to cut the carbon intensity of its operations.
The funding will support rail corridor upgrades, renewable energy procurement, and a shift from road to lower-emission freight transport.
Disbursement is conditional on reforms including infrastructure modernisation, ESG improvements, and diversification beyond coal-linked logistics.
“This funding will assist in achieving these objectives by enhancing energy efficiency and accelerate reforms,” said Transnet Group CEO, Michelle Phillips.
The loan is aligned with the Just Energy Transition Investment Plan JET-IP, and fulfils France’s larger €1-billion commitment announced at COP26.
“The investments in freight rail recovery, port modernisation and transition minerals export corridors are a demonstration that South Africa’s economic competitiveness and decarbonisation goals are inseparable,” said Marie-hélène Loison, AFD’s regional director for Southern Africa.
Unlike traditional project finance, where loan proceeds are allocated to specific investments, this loan is said to give Transnet the flexibility to deploy funds across a widely defined programme, that will allow it “to respond dynamically to its evolving business needs.”
Meanwhile Transnet is on the right track to complete its turnaround plan, with the utility set to allow private operators to use its network in 2026 and beyond.
This reform process has been coupled with improvements in Transnet’s performance, with the efficiency of South Africa’s ports stabilising and rail volumes improving.
The current trajectory of Transnet is a far cry from where it was two years ago, with the company effectively being on its knees after the state capture era.