State aid for Transnet

SUPPORT: GOVERNMENT BENDS WITH R94.8BN MORE IN GUARANTEES

- Roy Cokayne

Government has approved additional guarantee support of R94.8 billion for struggling state-run ports and rail group Transnet.

On Friday the government approved an additional R48.6 billion guarantee for Transnet, to ensure that all debt redemptions will be covered over the next five years and the transport entity will maintain sufficient liquidity levels, according to the department of transport.

This comes as international ratings agencies have either downgraded Transnet's credit rating or warned that it is running out of cash in recent months.

The department said the government had considered the impact of the credit downgrades on Transnet's existing debt and approved R46.2 billion for it to mitigate the risks of such ratings actions on its debt.

This additional "guarantee support" for Transnet follows government's approval of an allocation of R51 billion in guarantees to Transnet on 22 May.

That allocation comprised R41 billion for the funding requirements for the 2025-26 and 2026-27 financial years and R10 billion for liquidity management.

The latest additional guarantee support for Transnet follows Minister of Transport Barbara Creecy's announcement on 12 June that the government had initiated a process to allocate additional guarantees to Transnet.