Transport, logistics funds set aside shoddy on details – ARIA

Over the next five years Transnet has R70 billion in debt that is maturing and needs to be refinanced. Photo: ANA

Over the next five years Transnet has R70 billion in debt that is maturing and needs to be refinanced. Photo: ANA

Published Feb 23, 2023


The African Rail Industry Association (Aria) has called for more creativity in the resuscitation and development of the rail sector, with less emphasis on throwing money at Transnet.

This followed Finance Minister Enoch Godongwana allocating R351 billion to transport and logistics, but without articulating the directives for state-owned rail assets.

Aria CEO Mesela Nhlapo said rail needed a major boost, with a flailing Transnet and Passenger Rail Agency of South Africa (Prasa).

“We are not defining the problem. The reconstruction and recovery plan is something we know… Certain things require creating thinking and making do with what you have. State-owned enterprises have no option, but to partner with the private sector and that comes with some conditions,” Nhlapho said.

Aria maintains that the key question still facing the railway industry, as well as the vast upstream economy that relies on railway services is “who is going to resolve the Transnet funding shortfall”?

It said over the next five years Transnet had R70bn of debt that was maturing and needed to be refinanced. In addition, Transnet had a R111bn capex requirement of which, Transnet states R80bn was unfunded.

This means that Transnet needs to raise between R150bn and R181bn in the next five years.

Aria predicts that Transnet would achieve a maximum of 160 million tonnes of freight moved in the year-ended March, 2023 – a 29% drop from the 226 million tonnes moved in 2018.

Meanwhile, Chris Campbell CEO of Consulting Engineers South Africa said, “Implementation, implementation, implementation… It is one thing to allocate funds for infrastructure spend, but it helps no-one if it is not implemented to its fullest in the most value-for-money driven manner!”

He said Cesa agreed with the minister that “infrastructure investments laid the foundation for inclusive and sustainable growth; addresses supply-side constraints; and expands access to basic services”.

The plan for the public sector to spend R903bn on infrastructure over the medium-term was welcomed, with the largest portion of this – around R448bn – to be spent by SOEs, public entities, and through public-private partnerships.

While the minister said the focus was not only on building new infrastructure, but also on maintaining existing infrastructure and while we do this, we need to ensure that it lasts long and performs to the required standards.

Click here to view Business Report’s full coverage of the budget speech.