Transnet secures bailout to enhance rail and port infrastructure

IT IS HOPED that the R51-billion bailout for Transnet, announced by the Minister of Transport last week, will help revitalise the country’s rail and port facilities and secure South Africa's reputation as the gateway into Africa.

- YOGASHEN PILLAY & DAILY NEWS REPORTER

While it is yet to be established how exactly the entity would get to use the much needed financial assistance, but indications are that it will be directed mainly towards Transnet’s debt and infrastructure upgrades.

Experts in the maritime sector have been largely upbeat about the Minister of Transport’s announcement.

Transnet, in a statement, said that it welcomed the minister’s R51bn government guarantee facility to support Transnet's sustainability and long-term growth.

“The facility will enable Transnet to refinance maturing debt and ensure the organisation’s continued access to adequate resources and facilities to be able to continue its operations as well as fund the capital investment programme for the foreseeable future.”

Dave Watts, a maritime consultant, said that the communication from Transnet does not make clear how much of the R51bn guarantee will be used to roll over or refinance current debt and how much will be used for increased borrowing.

“Clearly the state guarantees are critical in enabling the organisation to continue as a going concern and provide ongoing services to the SA Logistics sector and broader economy.”

Watts added that refinancing maturing debt was not paying debt off; however, it was essential that there was sufficient working capital to enable ongoing operations and capital investments.