Transnet cautious on public-private deals

South African state-run freight infrastructure and logistics group Transnet said it was open to working with private companies to accelerate its expansion plan but would be cautious about any deals it signs.

South African coal exporters have been unable to ship all of their product due to inadequate infrastructure on the rail lines leading to the Richards Bay Coal Terminal and have said they are willing to pitch in to boost the Transnet expansion.

Transnet and the private sector have been discussing possible deals for years, and the industry had been hoping that some agreements could be made this year under new leadership.

But chief executive officer Brian Molefe on Monday dampened expectations that anything would happen soon, saying many such deals had turned out to be what he termed as “disasters”.

“We mustn’t be romantic about private sector participation … we are not violently opposed to that, but we will consider them case by case and where opportunities arise,” he said.


Coal producers in South Africa, including Anglo American, BHP Billiton, Exxaro, Optimum Coal and Xstrata, have been eager to export more coal to meet rising demand from India and China but have been limited by infrastructure bottlenecks.

Molefe said possible deals could include a partnership in which a private player would build and operate a line, or Transnet could give privately owned locomotives and wagons access to its rail lines or lease them.

The group said it would spend R110.6-billion on capital investments in the next five years and would borrow over R25-billion over the same period to help fund the investment and to redeem existing loans.

The company said it had transported 62.2-million tonnes of export coal during the financial year, far below the expanded capacity at RBCT of 91-million tonnes. Iron ore exports stood at 46.2-million tonnes during the 12-month period.

Transnet plans to raise capacity on the coal export line to 81-million tonnes by 2015 and for iron to 60.7-million by 2014.

The group is studying the possibility of freeing up some 14-million tonnes of capacity on the coal line by moving non-coal cargo to a new line via Swaziland in two to three years.

Transnet said its earnings before interest, tax, depreciation and amortisation (EBITDA) for the year to end-March rose to R15.8-billion rand from R14.4-billion a year earlier, boosted by higher volumes.

The state company plans to double the size of its domestic medium-term note programme to R60-billion rand to help fund its 2012 capital expenditure. It also plans to speed up the repayment of its expensive T18 bond, which is due to mature in 2018. — Reuters

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