The more than R100bn financial support package that Transnet has asked the National Treasury for includes a R47bn equity injection or loan, and for the government to take over R61bn of the company’s debt.
The Transnet board has come up with a 31-page turnaround plan that requires funding of more than R100-billion from the National Treasury over the next two years. Transnet wants an immediate release of cash from the Treasury amounting to R3.4-billion before the end of its financial year in March 2024.
When the government unveils the Medium-Term Budget Policy Statement on 1 November, it will miss the 2023/2024 February Budget targets by a mile, given the likelihood of tax revenue undershooting requirements by at least R50-billion, forcing it to cut department budgets and crucial service delivery programmes.
The turnaround plan, which has been presented to the ministers of public enterprises and finance, has targets that should be achieved over the next six to 18 months. The plan proposes a split of Transnet’s biggest unit, Transnet Freight Rail , into two new divisions — Transnet Freight Rail Operating Company and Transnet Rail Infrastructure Management.
If implemented, these measures will not result in big changes to Transnet’s financial situation. Acting Transnet group CEO Michelle Phillips said the turnaround plan was premised primarily on a recovery of rail volumes from the 149 million tonnes reported last year to between 154 million tonnes and 170 million tonnes by the end of March. She described the 170 million tonnes goal as a “stretch target”.
There is no infrastructure plan that can deal with incompetence and cadre appointments. The more money you put in, the worse it gets spent through badly managed contracts where the BBBEEE middlemen get rich.