Transnet chairperson Andile Sangqu. Picture: Supplied
Transnet chairperson Andile Sangqu revealed that the State-owned logistics company has incurred an alarming R4 billion loss in potential revenue this financial year, primarily attributed to rampant cable theft and widespread vandalism.
Speaking on a Radio 702 interview yesterday, Sangqu said these factors, along with a daunting maintenance backlog, posed significant hurdles to the entity’s broader recovery efforts.
However, Sangqu said Transnet’s recovery plan had its positive indicators in the clearing of backlogs at ports, building closer collaborations with the private sector, and stabilising of the executive floor but was bogged down by a balance sheet tilting on heavy interest costs, antiquated equipment, cable theft and a dysfunctional rail network.
He said the entity was also up to the neck in debt-service cost, compounded by the R47bn government guarantee, which took about 50% of Transnet’s earnings before tax depreciation and amortization (EBIDTA).
“We could be profitable in the 2025/26, that’s a reasonable timeline. I think things are directionally positive, that gives us reason for hope,” Sangqu said.
“It’s predicated on us having stabilised the leadership, having strengthened the ties of collaboration and engagement with the private sector, also with us making head way in fixing our balance sheet, [and] gaining momentum in bringing in the private sector where they can inject capital to assist us with the refurbishment programme, particularly on the rail. Lastly, if we can deal with the issue of cable theft, those are game changers in my view.”
Sangqu said the entity also faced challenges at Transnet Freight Rail (TFR), with an antiquated and vandalised rail network, signalling equipment.and overhead transmission lines.
“We have done a technical assessment. We know where the challenges are and we are now busy with the plan to raise funding for the replenishment and refurbishment of the track that will certainly help with stability,” he said.
“Signalling is antiquated equipment that is holding us back in terms of our recovery plan. We are busy with processes of procuring new signalling equipment and also working on our overhead transmission.”
He said a step in Original Equipment Manufacturer (OEM) had been brought in to help with repairs and refurbishment of the about 400 locomotives that were out of service while plans were made to introduce new stock from February next year.
“We are creating a rail leasing company. The idea behind that is that we have a number of locomotives that far exceed our requirements, which we would be able to make available through this leasing company for some of the new players to be able to lease them as part of the plan to access infrastructure at relatively affordable rates to participate in the network,” Sangqu said.
“I will not commit to times except it will be in 2025 precisely because there are so many internal processes and protocols to go through, but in terms of strategic direction, that is what is on offer.”
He said tariffs for third-party access had been finalised through an interim regulator and would be announced soon.
“We are at a stage now it’s pretty imminent for the Minister of Transport to make an announcement in terms of what would be the tariffs that would then be applicable in creating the space for third-party operators to use our network,” he said.
“But of course, the rate and pace of that access are still very much a function of us fixing some of the underlying problems in terms of safety, dependability and reliability of the network.”
Sangqu said Transnet still hankered after the portion of R100bn guarantor it had requested from National Treasury but was only granted R47bn.
“The other R50bn we needed to address the maintenance backlog and we are still struggling with that. Discussions are taking place. There are so many other things we are making progress on but this problem has not been addressed in the context of other things that still need to be done. We are putting our heads down,” Sangqu said.
BUSINESS REPORT