The pressure is on Transnet to get the State-owned entity back on track after Treasury acquiesced to a government guarantee of R47 billion.
It is hoped that Transnet will be able to use this lifeline to address the major issues affecting the SA’s port and rail infrastructure.
On Friday, Treasury stated that “the Minister of Finance has concurred with the Minister of Public Enterprises to issue Transnet with a R47 billion guarantee facility effective immediately in support of its recovery plan, including meeting its immediate debt obligations”.
It is anticipated that Transnet will now find it easier to secure credit and capital.
According to the statement, the financial support package provided for Transnet is a R47 billion guarantee facility against which Transnet will drawdown an initial amount of R22.8 billion to deal with immediate liquidity matters such as settling maturity debt.
“Government has not considered an equity injection given that the budget for 2023/24 is closed and is confident that this guarantee facility, alongside swift implementation of the Transnet Recovery Plan, will be sufficient to resolve Transnet’s challenges.”
TRANSNET AND THEIR DEBT
The SOE has a number of loans that are due in the next few months, and this new guarantee will help settle or expand the company's payment schedule.
Transnet has a portion of debt estimated to be almost R10 billion that needs to be paid by the end of 2023. Moreover, the company has to pay another loan to the value of R40 billion over the next three years. Transnet told Daily Maverick that it hoped to alleviate its debt issues by renegotiating the loan payment deadlines, especially the R10 billion December deadline.
STRICT GUARANTEE CONDITIONS
It should also be noted that a Guarantee Framework Agreement between Treasury, the Department of Public Enterprises, and Transnet will be implemented and will include strict conditions.
“A Guarantee Framework Agreement must be concluded between National Treasury, the Department of Public Enterprises, and Transnet within 14 days of the activation of the guarantee to ensure that any fiscal risks are mitigated and that the conditions of the facility are fully agreed to by all parties. In addition, the National Treasury will continue to work with Transnet to pursue other initiatives to revive its operations and financial viability”.
CRITICISM
The Democratic Alliance (DA) said on Saturday that it criticised the guarantee by the National Treasury.
Dion George, the DA Shadow Minister of Finance, said that he does not believe Treasury’s guarantee facility will resolve Transnet’s operational crisis.
"Transnet is hopelessly indebted and is unable to pay back its debt, and it is also unable to do the job that it is required to do. We need a fundamental change to the state-owned enterprise's model, and we need to ensure that the private sector capital is invested in Transnet and other broken state enterprises. In this way, we will then ensure that the entities become more efficient," he said.
THOUSANDS OF CONTAINERS LEFT STRANDED
Last week, the South African Association of Freight Forwarders (SAAFF) said that a number of container ships were avoiding Cape Town harbour and instead were berthing in Gqeberha and the Ngqura Port.
SAAFF noted that this had led to a major influx of ships that had created huge congestion on the Eastern Cape coast, with around 46,000 containers being stuck outside these two ports.
The association also noted that 79 vessels and 61,968 containers have been stuck outside Durban’s port since late November.
SAAFF said that ships have been waiting more than a week to enter Port Nqura and over nine days to enter Durban’s port. The port in Gqeberha has only made the vessels wait 32 hours.
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