TRANSNET has secured a R5bn loan from the New Development Bank, formerly the BRICS Development Bank, for the modernisation of its freight rail infrastructure.
“This investment is important for Transnet, as we accelerate implementation of the Recovery Plan and economic reforms,” said Michelle Philips, CEO of Transnet in a statement on Friday. The modernisation programme will enhance our operational capabilities and contribution to the growth and competitiveness of the economy.”
The loan will help restore freight rail volumes on Transnet’s key routes by re-equipping rail network infrastructure, overhauling locomotives, and the renewal of the wagon fleet.
Transnet’s freight rail problems have been demonstrated most plainly by the decline in coal exports over time. Coal exports through Richards Bay Coal Terminal fell in 2023 to 47.21 million tons (Mt) taking the terminal’s exports back to below levels last seen in 1992 when 48.59Mt was exported.
More recently, the outlook has been better, however. According to exporter Thungela Resources, RBCT should achieve 50Mt in coal exports this year provided Transnet Freight Rail can maintain performance improvements that have only become apparent in July.
The under-performance at Transnet has seen the company slip into a debt trap. In December last year South Africa’s National Treasury agreed to provide a R47bn guarantee facility to Transnet, the beleaguered rail and ports operator. Transnet had earlier requested an equity injection from the state as its R130bn debt pile means it’s unable to fund itself in capital markets.
An update on Transnet’s balance sheet is due on September 2 (Monday) when the state-owned firm reports its financial numbers for the year ended March.
