Transport Minister Barbara Creecy has approved a R51-billion guarantee facility for Transnet to support its capital investment programme and help it pay its debts.
This comes after Minister of Finance Enoch Godongwana said during his budget speech on Wednesday that National Treasury would consider a government guarantee support to Transnet, to enable the entity to refinance maturing debt, and to enable the execution of its capital investment programme.
Creecy, who made the announcement of the sum that had been decided on Thursday, said the facility was being made available in concurrence with Godongwana and would be effective immediately.
Transnet plays a central role in the South African economy and the governments goal of inclusive growth. The entity is currently engaged in a wide-ranging reform programme with the aim of improving operational performance in the short and medium term, Creecy said.
This programme aims to overcome operational, financial and governance challenges, hampering its ability to fulfil its strategic role.
Creecy highlighted the steps Transnet has taken to improve its efficiency and attract investment.
At the end of March, Transnet had succeeded in moving the equivalent of 161 million tons of freight on its rail network. In December 2024, the entity released the 2024/25 Network Statement, which facilitates private sector operators on the rail network. Announcements of the first successful bidders are expected by the end of July, Creecy said.
She added that in March, her department had issued a request for information for private investors for five key freight corridors and associated ports to promote private investment in infrastructure.
The RFI closes on May 31, and Transnet is expected to issue requests for proposals by September this year.
Creecy said interim solutions to meet capital investment needs included project-based applications to the budget facility for infrastructure.
Transnet is also working with National Treasury and the Presidency to develop a joint collaboration and funding policy to support immediate capital improvements by the private sector in priority freight corridors, Creecy said.
In recognition of the progress made to date, the National Treasury and the Department of Transport have been working with Transnet to find a solution to the companys immediate needs, and the decision to grant the guarantee facility is a result of these discussions.
The financial support package provided for the entity is a R41bn guarantee facility for its funding requirements for the 2025/26 and the 2026/27 financial years.
This package also includes a R10bn guarantee that Transnet will have to use for liquidity management related to servicing its maturing debt and capital investments.
On December 1, 2023, a guarantee support facility of R47bn was announced. This enabled Transnet to execute its recovery plan over the 2023/24 2024/25 financial years, which has seen increased capital investments and improved liquidity.
A Guarantee Framework Agreement between the Department of Transport and the National Treasury will include guarantee conditions that will be continuously reviewed and amended when deemed necessary, Creecy said.
Any drawdowns will be subject to Transnet meeting these conditions. These conditions will again focus on certain operational requirements and logistics sector reforms.
She is confident the support will enable the entity to drive operational improvements and implement reforms in line with the Freight Logistics Roadmap.
Transnet said in a statement that it welcomed the guarantee in support of its sustainability and long-term growth.
The facility will enable Transnet to refinance maturing debt and ensure the organisations continued access to adequate resources and facilities to be able to continue its operations as well as fund the capital investment programme for the foreseeable future, the ports and rail operator said.
It will also enable Transnet to focus on operational improvements and strategic reforms.
Transnet said it had already made significant strides in implementing rail and port reforms.
In pursuit of enhanced partnership and collaboration, several key Private Sector Participation PSP transactions are being implemented. PSPs are a key element of the organisations strategy to modernise its operations and infrastructure and grow the logistics sector for the benefit of the economy.
With governments commitment to support its recovery and strong collaboration with
customers and industry partners, Transnet is on course to recover and fulfil its strategic role in the South African economy.
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