Transnet reveals mega upgrade

Transnet is confident its R300-billion capital expenditure programme is achievable and its plans to enable a shift away from road by expanding rail, port and pipeline infrastructure will now be put into action.

At the launch of its market-demand strategy in Johannesburg this week, Transnet described the projected goals for the seven-year project as “conservative”. The programme aims to meet market demand by 2019.

Brian Molefe, chief executive of the transport and logistics parastatal, told the Mail & Guardian that the biggest challenge was capital deployment and execution risk.

“That keeps me awake at night,” he said. There are several external and internal factors that pose challenges, although Transnet said risks had been identified and mitigating action developed.

The management of mega projects such as the new multiproduct pipeline has come under the scrutiny of Public Enterprises Minister Malusi Gigaba, who in January appointed a panel of experts to probe its cost overruns and time delays. But Molefe said all these findings would only better prepare the organisation to roll out the seven-year programme.
“We consider the pipeline a learning curve,” he said.

Between 2012 and 2019, export coal would increase by 44% and export iron ore would increase by 57%. General-freight business is expected to meet market demand by 2017 and would increase by 113%. Maritime containers would rise by 76%.

Of the R300-billion capital investment, R210-billion would come from Transnet’s own cash flow, Molefe said. The additional R90-billion would largely come from commercial paper and domestic bonds.

Job creation would be another result of the programme. It is expected to create 588 000 job opportunities at its peak and would focus on skills and capacity building.

Transnet’s own staff would increase by 25%, but there would be a larger effect on indirect jobs and an economy-wide impact. There would be an increased intake in schools of excellence and R4.6-billion would be spent on bursaries and grants. The entity would also help 2 000 apprentices to attain skills - more than Transnet would need, Molefe said.

The strategy aimed to position South Africa as an integrated hub into sub-Saharan Africa. Molefe said Africa’s regional integration potential, currently low, would inevitably improve.

Transnet’s Africa strategy initiatives include the export of wagons, locomotives and rail maintenance services. Growth in the Maputo Corridor and increased collaboration, such as a Swaziland rail link, were offered as an example of progress in this direction.

Infrastructural plans in surrounding countries such as Nambia, Botswana and Mozambique were not considered competition, Molefe said. “In fact, they are quite complementary. We can plug into those to promote intra-African trade.”

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

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