South Africa’s cash-strapped logistics utility will be opened to third-party operators starting in May, Finance Minister Enoch Godongwana told Parliament during his Budget Speech for the 2024/25 financial year.
The long-awaited involvement of private-sector participants in the country’s dilapidated freight rail sector is expected to help claw back losses of R353 billion attributed to nagging capacity and infrastructure shortfalls experienced by Transnet Freight Rail (TFR).
The loss in revenue is calculated to have eroded at least 4.9% out of the GDP last year as leading mines such as Amplats and Kumba Iron Ore failed to move the quantum of projected commodities to South Africa’s heavily congested ports.
As a result, both mines have announced labour cuts because of reduced production, with Amplats warning that 3,700 jobs are at risk.
Godongwana said that revitalising crucial logistics across the country is part of the Freight Logistics Roadmap that Parliament approved last year.
“In this regard, third-party access to the freight rail network will be introduced by May 2024,” he said.
Regarding last year’s National Treasury commitment of a R47 billion bail-out package to get Transnet back on track, Godongwana failed to say anything of real consequence.
When the bailout was announced on December 1, Treasury said: “The Minister of Finance has concurred with the Minister of Public Enterprises to issue Transnet with an R47 billion guarantee facility effective immediately in support of its recovery plan, including meeting its immediate debt obligations.
“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 has not considered an equity injection given that the budget for 2023/24 is closed and is confident that this guarantee facility alongside swift implementation of the Transnet Recovery Plan will be sufficient to resolve Transnet’s challenges.”
South Africa's long-suffering logistics industry hoped to at least hear the details of the initial bailout payment of R22.8 billion.
That the facility "comes with conditions", is all Godongwana said.
Speculation is rife that the "conditions" referred to are about the impact of possible private-sector investment on Transnet's labour force, a moot point for the government of President Cyril Ramaphosa considering that it's heading into a national election on May 29 that could lead to a hammering of the ANC at the polls.
