Analysts said that the privatisation of Spoornet, the rail freight division of Transnet, seemed likely to proceed "by stealth" if infrastructural upgrading was financed off Transnet`s balance sheet, as proposed by Saki Macozoma, Transnet`s managing director, on Friday.
Gary van Staden, a privatisation analyst at SG Frankel Pollack, said going to outside investors for funding would imply selling equity in the parastatal.
Despite posting a R266 million loss for the six months ending in September this year, Spoornet announced last week that it would be investing R2,7 billion in infrastructural development in its coal and iron ore export lines.
Macozoma said the company would explore every option available to finance the deal off the balance sheet in order to escape the risk of "ballooning interest rates".
"It will be less complicated to finance this capital expenditure off the balance sheet, even though this might be regarded by some as privatisation by stealth," said Macozoma.
Raising the money in this manner meant that Transnet, already heavily indebted, would not be borrowing the funds. Instead, it would seek an injection of capital from an outside investor.
Of the R2,7 billion, R1 billion would be directed at increasing capacity on the South Dunes Coal Terminal at Richards Bay by 12 million tons to service independent coal producers and the balance at upgrading the iron-ore export line between Sishen and Saldanha Bay.
Van Staden said avoiding further debt would be a "smart move" on Transnet`s part.
"If the capital for the project is not raised through lending, they (Transnet) will not have to worry about debt. They will, however, be hard pressed to avoid a privatisation by stealth characterisation," said Van Staden.
But a source close to Transnet said serious doubts had been raised as to how the money would be raised. He said no framework was in place to facilitate the sale of equity in Transnet and cabinet approval would have to be secured before the company could proceed with its plans.
Van Staden said without a proper policy framework in place securing any kind of outside investment would be virtually impossible.
Given Macozoma`s stated intention to have a restructuring framework for Spoornet in place by June next year, Transnet would have to move swiftly to get the nod from government. This could be easier said than done given the complex debate that would undoubtedly surround the issue once labour was brought into the equation. - Johannesburg