Transnet has faced operational challenges mainly in the critical rail and port businesses. These resulted from underinvestment in infrastructure and equipment, theft and vandalism, and external shocks. Such as floods and the effects of the Covid-19 pandemic.
“We appreciate the support demonstrated by the African Development Bank. The loan … will make a significant contribution to Transnet’s capital investment plan. To stabilise and improve the rail network and to contribute to the broader South African economy.
Energy efficiency, infrastructure preparation initiatives
“The accompanying grant funding to the loan will also greatly assist Transnet with its energy efficiency efforts. Also with Infrastructure Project Preparation initiatives,” Transnet Group CEO Michelle Phillips said.
The 25-year loan, which was approved by the bank’s group board of directors on July 12 2024, is fully guaranteed by the government.
It will facilitate the first phase of the company’s R152.8-billion five-year capital investment plan. The plan to improve its existing capacity ahead of expansion for the priority segments throughout the transport value chain.
“The company is committed to addressing past challenges, fostering integrity, and enhancing efficiency within the organisation. It has made progress in some key areas. These include… reforms in governance procurement and financial management,” a joint statement by Transnet and the African Development Bank said.
Recovery plan
In October 2023, Transnet launched its recovery plan. It seeks to rehabilitate infrastructure and accelerate the relaunch of operations over 18 months. Focusing on restoring operational performance and freight volumes to meet customer demands.
“The custodian of SA’s critical transport and logistics … infrastructure, Transnet plays an indispensable role in the country’s economy. Ensuring a competitive freight system and serving as a gateway to the Southern African Development Community (SADC) region.
“Our partnership will enable Transnet to execute a comprehensive Recovery Plan (RP). [It will] address operational inefficiencies, particularly in rail and port sectors. The plan is aligned with SA’s strategic ‘Roadmap for Freight Logistics System’. It is overseen by the National Logistics Crisis Committee, chaired at the Presidency level.
Commitment to enhancing national logistics capabilities
“This initiative signifies our commitment to enhancing national logistics capabilities. And driving sustainable economic growth,” the bank’s Vice President for Private Sector, Infrastructure and Industrialisation Solomon Quaynor said.
Transnet has been a client of the African Development Bank since 2010. The company employs more than 50,000 people. It plays a critical role in integrating and connecting South Africa with the global economy.
The company’s freight system’s activities contribute significantly to South Africa’s economy.
Its operations serve as key gateways for trade within South Africa and with landlocked countries in the region. Such as Botswana, Zambia, Zimbabwe, and the DRC through the Port of Durban.
- SAnews.gov.za
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