Transnet’s procurement governance and controls are described as “broken down” in the budget review released together with finance minister Tito Mboweni’s budget speech yesterday.
“The new board has hired forensic specialists whose responsibilities include reviewing the contract for the acquisition of 1 064 locomotives,” it says.
For 2017/18 Transnet reported that 40% of expenditure was for acquisitions of locomotives and pipelines, 31% for maintenance and 29% for other projects.
The group’s net profit increased to R4.9 billion in 2017/18, up from R2.8 billion in the prior year, largely as a result of increases in the volumes of export coal, railed automotive and port containers.
Volumes, however, still fell short of targets.
Cash generated from operations increased by 12.6% from R31 billion in 2016/17 to R34.9 billion in 2017/18.
Total assets improved from R353 billion in 2016/17 to R369 billion in 2017/18, mainly due to the revaluation of rail and port infrastructure. Equity remains “healthy” at R156 billion, according to the review.
Transnet’s capital expenditure is expected to total R102 billion over the next three years.
The biggest outlay over the next financial year will be on locomotives (R7.2 bn), followed by rolling stock (R2.8 bn) and rolling stock maintenance (R1.6 bn).
