R17bn of borrowings, secured
R16.9bn of committed facilities
with financial institutions and
raised R11.8bn without govern-
ment guarantees. But its income
statementrevealssomeweakness.
In the six months to September,
revenue increased just 1.2% to
R32.6bn as rail volumes dropped.
Signs of strain are there, and
Transnet’s spending on infra-
structure development has fallen
sharply. In the September 2016
statement capital investment
amounted to R9.4bn – a 41.4%
decline year-on-year from the
same period in 2015. The com-
pany invested just R2.3bn on
Upgrades
to the
flagship port
of Durban,
including
deepening
berths, are
a key part
of Transnet’s
Market
Demand
Strategy
the expansion of infrastructure
and equipment, and R7.1bn to
maintain capacity in its rail and
ports divisions. It has spent just
R133bn on the Market Demand
Strategy since it was conceived
five years ago.
DRAGGED INTO THE NET
To make matters worse, the
company’s attempts to insulate
itself from the broader malaise
of poor governance, corruption
and South Africa’s economic
slump are starting to fall apart.
As South Africa slid deeper into
recession, it appears that the
country’s economic and political
problems may seriously impinge
on Transnet’s ability to meet its
investment goals.
The Strategy was announced
under former chief executive
officer Brian Molefe, who is now
attheverycentreof‘statecapture’
revelations, a web of corruption
uncovered by former public pro-
tector Thuli Madonsela that con-
nects President Jacob Zuma with
the Gupta family of businessmen.
Among the projects Molefe
announced was a R50bn order
for more than 1,000 locomotives
indealswithChinaNorthRailand
China South Rail (now CRRC),
GeneralElectricandBombardier,
atangle
KEVIN SUTHERLAND/BLOOMBERG VIA GETTY IMAGES
