The government has approved an additional R94.8bn in guarantee support for Transnet, which is focused on turning around its business in the face of its debt burden.
The approval of additional government support comes after international credit rating agencies downgraded the ports operator recently, citing concerns about its unsustainable debt burden and its reliance on state financing.
The Department of Transport announced on Sunday that the government had approved a R48.6bn guarantee for Transnet “to ensure that all debt redemptions will be covered over the next five years, and that the entity also maintains sufficient liquidity levels”.
“Government has also considered the impact of the credit downgrades on Transnet’s existing debt, and has therefore also approved R46.2bn for it to mitigate the risks of such ratings actions on its debt. This additional guarantee support for Transnet amounts to R94.8bn,” the department said.
This follows government’s approval of an allocation of R51bn in guarantees to Transnet on 22 May. The allocation comprised R41bn for the funding requirements for 2025/26-2026/27 and R10bn for liquidity management purposes.
Transport Minister Barbara Creecy had earlier announced that the government had initiated a process to allocate additional guarantees to Transnet.
“Government will continue to work with Transnet to ensure operational and financial improvements in the company, and to accelerate implementation of reforms for the logistics sector, including private sector participation,” the department said.
Transnet’s debt balance was R145bn at the end of the 2023/24 financial year after its loss grew to R7.3bn from R5.7bn in 2022/23.
