South African government to help transnet pay its debts

by Kelebogile Matlou

The South African government will give more financial support to Transnet, a company that runs ports and freight trains. This support will help Transnet pay off its debt and improve its services.

Barbara Creecy, minister of transportation, announced last month that the government had granted a guarantee for Transnet for R51 billion, or almost $2.9 billion. This implies that the government will assist Transnet if it is unable to pay its debts. The Department of Transport stated that the whole assistance plan will be available by July 25.

image: Business Day

Transnet’s plan for the next five years shows it needs to pay back about R99.6 billion. The government said it will keep a close eye on Transnet to make sure it makes the needed changes. “The government will monitor the performance of Transnet to ensure it provides adequate support to it as it implements the reforms required by the government,” the department said in a statement on Thursday.

The R47 billion guarantee Transnet obtained in 2023 is increased by this new assistance. The company’s overall debt was R138 billion as of the end of March 2024.

Transnet has been attempting to improve its operations following years of mismanagement, during which it lost billions of rands to bribery. Its container ports are among the least efficient in the world, according to the World Bank and S&P Global Market Intelligence.

Moody’s Ratings warned on May 16 that the corporation would run out of funds for operations and debt service within three months if the government did not intervene.