‘Government ownership should not equal inefficiency’ RAY SMUTS MARIA RAMOS admitted last week that time was of the essence for SA’s port upgrade plans. Addressing a jam-packed Cape Times-Safmarine breakfast club in Cape Town last week, the Transnet CEO said that “something” had cropped up at the last minute to delay a ruling on the proposed multi-million rand extension to the Cape Town Container Terminal. And while she agreed it was important to strike a balance between people and the environment - the latter at the heart of the single appeal against the proposed project designed to increase capacity three-fold to 1.5 million TEUs a year – she said time was running out if South African ports wanted to hold its cargoes, get bigger ships and be globally competitive. “If it’s not going to be Cape Town (extended) we are going to have to think of another alternative because if we don’t those cargoes will simply go somewhere else.” Ramos said the fact that Transnet had only one shareholder, the government, was of no consequence. “There is nothing in the book that says because government is your only shareholder you should be inefficient, unproductive and uncompetitive. “In fact, it should be the opposite because if we fail it’s the South African taxpayer’s monies that will have to bail us out, so failure is not an option.” Dealing with Transnet’s turnaround strategy, she said it was clear that more and more emphasis was being placed globally on quality of infrastructure. “The less developed you are, the poorer you are, the poorer the quality of your infrastructure, the more costly it is to do business in your country. “The accessibility of quality infrastructure depends how competitive you are and in South Africa we are very far from that environment. “We all realise that the cost of our transporting logistics remains too high at 13% of GDP.” Recalling President Mbeki’s comment at the opening of Parliament a few years ago, that the key objective for a state-owned enterprise was reducing the cost of doing business, Ramos said Transnet was now “pursuing quite vigorously” its focus on bulk freight and logistics. “We are all interested in keeping the freight part of Spoornet, our ports and land operations through National Ports Authority and South African Port Operations and our pipeline business.” Three of Transnet’s key strategies are cleaning up the balance sheet, disposing of 13 non-core assets, including a 26% stake in the Victoria and Alfred Waterfront – estimated to be worth around R5 billion seven months ago – and human capital, the biggest challenge faced in order to build capacity. Ramos said Transnet would spend R40 billion over the next five years to upgrade railways, ports and petroleum pipeline infrastructure, and borrow R25 million over the same time frame to fund its massive capital investment programme. She emphasised that notwithstanding the turnabout of some R14 billion in Transnet’s profitability from a loss of R7.7 billion the previous financial year, much hard work lay ahead to complete the turnaround strategy. “There are no short cuts.” Spoornet, with losses of R21 million and assets of R9 billion, was currently the only struggling core asset in the group and it was planned to spend about 40% (R16.1 billion) of capital investment to upgrade the rail parastatal, where the average age of locomotives was 27 years and the average age of train drivers closer to 54 years.
