[miningmx.com] – TRANSNET, the state-owned logistics and transport
utility, said that it would study means of raising an additional R100bn to expand its
R300bn infrastructural spend approved by Government in February.
“If we had an unconstrained budget, we could spend as much as R480bn in total,’ said
Brian Molefe, CEO of Transnet, in an interview with Miningmx.
“Some R70bn is already budgeted for the Durban International Airport (DIA),’ said
Molefe of the site that Transnet hopes to turn into a port facility. “We’ll have more
information by February, but this could be the biggest PPP ever.’
This followed an earlier statement by Transnet chairman Mafika Mkwanazi, who said
that the utility was considering widescale public/private partnerships as a means of
optimising the company’s balance sheet, already facing a downturn in the world’s
commodity market and downgrades to South Africa’s credit rating. Mkwanazi was
speaking at Transnet’s interim results presentation.
At the presentation, Molefe said that South Africa’s recent sovereign credit rating
downgrades were not expected to impact on the utility’s borrowing plans, estimated to
total R14bn in the 2013/14 financial year.
Borrowings increased to about R13bn at the half-year point in the 2012/13 financial
year – and were expected to remain at that level – to a total borrowings level of
R71.2bn. Expenditure in the six months totalled R12.8bn, an increase of just over
R3bn year-on-year.
Commenting on downgrades by ratings agencies Standard & Poor’s (S&P) and Moody’s,
Molefe said: “Moody’s did not downgrade Transnet, while S&P said it had not
downgraded Transnet on a standalone basis, but owing to the sovereign downgrade’.
President Jacob Zuma in February this year approved a R300bn, seven-year capital
expenditure programme for Transnet, in which it would upgrade the country’s
infrastructure, including rail and port facilities.
Transnet’s interim results showed the strains of the infrastructure build.
Net finance costs of R2.5bn and a further R4.9bn in depreciation and amortisation
costs reflected the higher capex bill and increase in assets.
The combination of the charges was to take net profit down to R1.8bn from the R2.3bn
net profit achieved in the six months of the previous financial year.
Molefe said this “was still a profit’ while at the operating line, a true reflection of
Transnet’s operating performance, the company posted a R10bn profit, a 7% year-on-
year improvement.
Total rail volumes increased 7.5% in the six months but there had been train
cancellations owing to the disputed iron ore supply agreement between Sishen Iron
Ore Company, owned by Kumba Iron Ore, and ArcelorMittal SA.
Iron ore volumes had also been interrupted owing to disruptions from a wildcat strike
at Kumba Iron Ore’s Sishen mine, while a truck drivers’ strike had also affected mine
production that had led to train cancellations.
Export coal deliveries to Richards Bay Coal Terminal (RBCT) from Mpumalanga
province had come in at 33.9 million tonnes (Mt) which, on an annualised basis would
total 68Mt, said Siyabonga Gama, CEO of Transnet Freight Rail (TFR), the largest
division in Transnet.
