Treasury grants Transnet R47 billion bailout
Finance Minister Enoch Godongwana has confirmed an R47 billion guarantee facility for Transnet to support its recovery plan and pay its debts.
The grant is available immediately.
In a statement released on Friday morning, the National Treasury says the entity has suffered significant operational, financial and governance challenges, struggling to fulfil its role as the train operator.
The State-Owned Enterprise (SOE) has been faced with challenges leading to thousands of containers being stuck at the country's ports before the festive season, which is usually busy with imports and exports.
Transnet has since managed to clear the backlog at the Cape Town Container Terminal.
However, the Durban and Richards Bay harbours are still struggling with severe backlogs.
The National Treasury says it has been working with the Department of Public Enterprises and Transnet to solve the SOE’s immediate and longer-term problems.
“The government continues to pursue deep-running, broader reforms of the company and the logistics sector as a whole. Without a comprehensive reform of the sector, rather than that of a single entity, we risk facing similar challenges in the future," reads the statement.
Treasury says the decision to grant the guarantee facility follows various discussions.
"The financial support package provided for the entity is an R47 billion guarantee facility against which Transnet will draw an initial amount of R22.8 billion to deal with immediate liquidity matters such as settling maturity debt.
Government has not considered an equity injection given that the budget for 2023/24 is closed and is confident that this guarantee facility alongside swift implementation of the Transnet Recovery Plan will be sufficient to resolve Transnet’s challenges," says Treasury.
Treasury adds Transnet will have to comply with strict guarantee conditions.
"Any further drawdowns will be subject to Transnet meeting these conditions.
Minister Godongwana is positive that the necessary reforms needed to put Transnet back on track can be achieved if the entity commits to meeting the strict conditionalities attached to the guarantee and quickly implementing the reforms informed by the National Logistics Crisis Committee.”
