Having for the first time in a decade halted the draining away of freight transportation from the railways to the roads, Maria Ramos, the chief executive of Transnet, and her team are aiming to win back a large slice of the business.
“Not all cargo on the roads is suitable for rail,” Ramos explained to a media briefing held in Cape Town on Wednesday, “but we are targeting the container traffic aggressively.”
According to Siyabonga Gama, head of the rail-freight division, they are planning for a 12% increase in the current financial year.
Ramos reckoned that the rail and port operations of Transnet can offer an integrated way of moving containers around the country, and expected that the re-equipment of the railways will increase efficiency and service.
“As we get the new equipment we shall be in a better position to do it,” she said.
The R78-billion to R80-billion capital-expenditure programme of the state-owned freight utility is on track, she said, although this year may have some funds to roll over, partly because of the environmental delays to the development of the Cape Town container terminal.
Although there has been some increase in the cost of the infrastructure, “all of the projects are within the cost escalations we planned”, she said. “We are still in a comfortable position. If costs go beyond what we planned we will have to rethink.”
Ramos was speaking to the press before briefing the portfolio committee on public enterprises on Transnet’s annual report.
She was anxious to point out that Transnet is a wholly different creature from what it was three years ago. There has been a 78% improvement in operating profit since 2004. Earnings before interest, taxation, depreciation and amortisation have seen an improvement of 139%. Cash interest cover is up 54%. Gearing is 53% better. And the shareholders’ equity has improved from R9,9-billion to R37,4-billion — 278%.
“Three years ago we would not have been able to raise any money. We just did not have the balance sheet to do it,” she said. And she added that Transnet has been able to finance a lot of it from its own reserves.
The process of getting rid of non-core assets is almost complete, Ramos said. The C Preference shares have been disposed of to Newshelf 664 for R5,7-billion. Viamax has gone to Bidvest for approximately R1-billion, and the Transnet housing-loan book has been taken over by FirstRand Bank for R1,4-billion (subject to Competition Commission approval).
All that is now left is the bus company, Autopax and the luxury Blue Train. Talks with the Department of Transport for the takeover of the bus company are under way, and 15 expressions of interest in the Blue Train have been whittled down to a shortlist of five, which on Monday began the due diligence inquiries.
After the completion of these deals, Transnet will be a freight-only operator, rebranded as a monolithic entity, with its divisions all carrying the name Transnet: Transnet pipeline, Transnet ports and so on. — I-Net Bridge