Home South African National Treasury gives Transnet bailout of R47 billion

National Treasury gives Transnet bailout of R47 billion

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National Treasury said it was confident the R47 billion bailout given to Transnet will help it to resolve its challenges.

Public Enterprises Pravin Gordhan said Transnet was critical to the economy of the country. File Picture: Kopano Tlape/GCIS

NATIONAL Treasury has given Transnet a bailout of R47 billion to meet its debt obligations and support its recovery plan.

Transnet has been facing a port and rail network crisis in the last few months.

Thousands of containers are stuck at sea as there is a backlog in the ports of Durban and Richards Bay. Cape Town has been able to clear the backlog.

Hundreds of trucks wait for days near Richards Bay before they can offload goods.

The destruction of the rail network has led to the decline of volumes. The volumes declined from 226 million tonnes to 149m tonnes in the last few years.

President Cyril Ramaphosa met with business this week where they discussed plans to ramp up the logistics sector. The National Logistics Crisis Committee wants to fix the rail network and increase volumes of cargo to boost the economy.

National Treasury confirmed on Friday that it has given Transnet R47bn to meet its debt obligations and to support its recovery plan.

The R47bn will be available immediately.

National Treasury said Transnet was a critical entity in the economy.

However, in the last few years it has faced serious challenges.

Government was focusing on the reform of the logistics sector.

“The financial support package provided for the entity is a R47 billion guarantee facility against which Transnet will draw down an initial amount of R22.8bn to deal with immediate liquidity matters such as settling maturity debt.

“Government has not considered an equity injection, given that the budget for 2023/24 is closed and is confident that this guarantee facility alongside swift implementation of the Transnet Recovery Plan will be sufficient to resolve Transnet’s challenges,” said National Treasury.

The bailout to Transnet given by Finance Minister Enoch Godongwana is with conditions that have to be met.

“Minister Godongwana is positive that the necessary reforms needed to put Transnet back on track can be achieved if the entity commits to meeting the strict conditionalities attached to the guarantee and quickly implementing the reforms informed by the National Logistics Crisis Committee,” said Treasury.

National Treasury will work with Transnet to resolve the challenges it faces.

Both the Department of Public Enterprises and Treasury agree that Transnet was key to the economy.

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