l Find SAA an international equity partner l Get rid of PX l Privatise port operations THE TRANSNET figures for 1996/97 hide a relatively good operational performance beneath an impenetrable cloud of pension fund debt.
The feeling in the private sector is that - with management given a capitalistic free hand, and a bit of adept pruning of the operation - Transnet could be a healthy, profit-making business.
Suggestions put to FTW include getting an equity partner (preferably a major in the international aviation industry) for SAA, and clipping its wings on unprofitable routes (domestic and international). An airline executive referred to the industry as a big boys' game, where only global players are effective. He sees SAA as a predominantly regional carrier, maintaining only a few of its big-profit international legs, and linking-in to a partner airline's network in the rest of the world. The airline recorded a worrying R323-million loss last financial year, and the cut-back in orders for replacement aircraft make it likely that the now-ageing SAA fleet will become less-and-less economical in years to come.
Everybody suggests that parcel express operator, PX, must go. Indeed with a R500-million rand loss this year being added to its utterly woeful performance since its start, it should have been shut-down or sold-off years ago said one observer with private sector business logic.
A sort-out of these two problem areas would bring Transnet into the area of being a R2-billion operational profit-maker.
But the 1996/97 R2,1-billion cost of the pension and medical aid funds hangs like a millstone around the group's financial neck, and throws it into an overall loss-making situation - down R170-m for the last financial year.
This despite the huge R1,7-bn profit that Portnet produced. Not that this is seen as real profit. Port users all point to the onerous ad valorem wharfage charges as being Portnet's real cream - and totally unearned, according to observers. Said one: Given that most of its infrastructure was amortised years ago, it is charging against a cost that doesn't exist. There's also no added-value to merit the charge, so it's no more than a tax on users. Privatisation of port operations is seen as one answer to this complaint - with rates assessed against true costs, and cost-efficiency to back it up.
But, although privatisation and restructuring are the two primary words in the government's vocabulary surrounding Transnet, an intra-governmental slanging match is clouding the future of the privatisation process.
For the last year, transport minister Mac Maharaj and public enterprises minister, Stella Sigcau, have continued an at-times bitter debate about who-controls-what re Transnet, and how-far and how-fast the privatisation programme will progress.
Some three months ago, a truce seemed to have been called in the inter-ministerial war. At that stage, director general of transport Ketso Gordhan (a man frustrated by divided government responsibility over Transnet) put forward his department's privatisation suggestions to the public, with no adverse reponse from the Sigcau camp.
The government - up to cabinet level - also seemed to be happy with the Maharaj departmental scheme to accelerate the retructuring/privatisation agenda.
In the meantime, a draft report had been presented to the public enterprises department by its private-sector advisers, in which widespread privatisation of the Transnet group's numerous subsidiaries was recommended. Prepared by the UK investment bank HSBC and presented by by its local stockbrokers Simpson McKie James Capel the report (dated March 24) went further along that privatisation path than Sigcau had publicly ventured up to then. But, again, there was no objection or rejection raised by public enterprises, and this was seen at the time as an amelioration of the difference in outlook between the two departments.
But, at the same time as he was presenting his group's figures at the beginning of August, Transnet m.d., Saki Macozoma also fired off a broadside of complaint about Maharaj's statements. Reckless was one of the words used as Macozoma - backed by his board - rejected the speed of the restructuring that the transport department had proposed.
In this, he seemed to be firmly backed by Sigcau, with her spokesman, Wandile Zote, reported as saying that his minister supported the board's concern about the extent of change proposed for the group..
This wrangling match coming to a head again could be a serious obstruction in the privatisation path, and is disturbing to potential investors in the new scheme. However, an inter-ministerial committee under the chairmanship of deputy president Thabo Mbeki is soon due to be sitting down to examine a master plan for Transet, and this could clarify the route ahead for potential investors.
