By Lehlohonolo Lehana.
National Treasury has confirmed that it has issued Transnet with “a support package of R47 billion to support a recovery plan, including meeting its immediate debt obligations,” Treasury said in a statement on Friday morning.
It comes just a month after Finance Minister Enoch Godogwana refused to give Transnet a bailout or any sort of support in his October medium-term budget.
“The Minister of Finance has concurred with the Minister of Public Enterprises [Pravin Gordhan] to issue Transnet with a R47 billion guarantee facility effective immediately, in support, of its recovery plan including meeting its immediate debt obligations. Transnet plays a central role in the South African economy and the government’s goal of inclusive growth..,” the Treasury noted in its statement.
“In recognition of the seriousness of these challenges, the National Treasury and the Department of Public Enterprises have been working with Transnet to find a solution to the company’s immediate and longer-term problems, and the decision to grant the guarantee facility is a result of these discussions,” it said.
“Government continues to pursue deep-running, broader reforms of the company and the logistics sector, as a whole. Without a comprehensive reform of the sector, rather than that of a single entity, we risk being faced with similar challenges in the future.”
“The financial support package provided for the entity is a R47 billion guarantee facility against which Transnet will drawdown an initial amount of R22.8 billion to deal with immediate liquidity matters such as settling maturity debt.”
Government and Transnet bosses are likely to insist that the move is not a state bailout, as it is not an equity injection.
However, Transnet has had no option, but to ask its sole shareholder for help, with its debt-burden ballooning to R130 billion and little access to further funding in the commercial markets.
In terms of the recovery plan, Transnet said it is confident it can turn a R5.7bn loss into a R5.1bn profit in the next two years. This is premised on increasing rail volumes to 170Mt by the end of the 2023/24 financial year and 191Mt by 2024/25, from a low of 149Mt reported in 2022.