Transnet gets R47 billion lifeline

South Africa’s National Treasury agreed to provide a R47 billion guarantee facility to Transnet, the nation’s beleaguered rail and ports operator.

The company will be able to access R22.8 billion immediately, the Treasury said in a statement on Friday. Transnet will have to meet “strict guarantee conditions” for the rest of the funds, according to the statement. 

Inefficiencies at Transnet have prompted companies to cut thousands of jobs to reduce costs after failing to ship commodities and other goods.

Transnet had requested an equity injection from the state, as its R130 billion debt pile means it’s unable to fund itself in capital markets. It also needs money for a turnaround plan to increase exports, which are vital for the economy.

The state rail and port company’s performance has deteriorated rapidly over the past decade as corruption and mismanagement during the administration of former President Jacob Zuma took their toll, followed by pandemic-induced losses.

A surge in infrastructure theft and restrictive graft-prevention measures by the Treasury deepened the malaise. 

Portia Derby, appointed three years ago as chief executive officer to fix the business, left as the situation grew worse.