Transnet and China Export Credit Insurance Corporation (Sinosure) yesterday agreed a $2.5-billion funding guarantee.
The agreement was signed by acting group chief executive, Siyabonga Gama, and Sinosure’s Li Hao, in the presence of Public Enterprises Minister, Lynne Brown.
Transnet will use the guarantee to finance procurement of mechanical, electrical products and equipment from Chinese enterprises. It will also cover funding for operation, maintenance and other services from Chinese enterprises in South Africa.
Transnet and Sinosure agreed that the guarantee should be preferably used for railway, ports and pipeline projects in South Africa and could be extended to other areas, should the parties agree.
Credit in terms of the agreement shall not exceed 15 years. This is in line with Transnet’s stated objective of matching the tenor of its liabilities with the life of its assets.
The guarantee enables Transnet to raise funds in the markets for the financing of its infrastructure investment programme, including acquisition and maintenance of its locomotive fleet. Importantly, it guarantees Transnet favourable repayment terms, including longer tenor and competitive interest rates.
