(Reuters) – South Africa’s Transnet is seeking debt relief from the government as it seeks to repair its balance sheet and restore freight rail and port capacity, the state-owned logistics firm’s chairman said on Tuesday.
Transnet is saddled with 130 billion rand ($7.30 billion) in debt and has struggled to provide adequate freight rail and port services due to equipment shortages and maintenance backlogs after years of under-investment.
Last December, South Africa’s government said it had handed Transnet a 47 billion rand guarantee facility to help the company meet “immediate liquidity matters such as settling maturity debt”.
Transnet board Chairman Andile Sangqu told journalists that the company’s debt repayments were averaging just over 1 billion rand monthly.
Part of the debt had arisen from “state capture”, Sangqu said, referencing a graft scandal which rocked South Africa’s government between 2010 and 2018 under former President Jacob Zuma and cost Transnet and other state enterprises billions of rand in corrupt procurement deals.
“We will require the assistance of the shareholder to give us some form of debt relief,” Sangqu said.
He said efforts to restore Transnet’s freight volumes under a recovery plan announced in October 2023 were being undermined by debt servicing.
“As we begin to make this increase in volumes, as we begin to generate new operational cash flows, they all get wiped out by the debt service costs,” he said.
Transnet’s freight volumes have declined to 152 million metric tons in financial year 2023/24 from 226 million tons in 2017/18.
$1 = 17.8122 rand)
(Reporting by Felix Njini; Writing by Nelson Banya; Editing by Jonathan Oatis)
