Transnet
Crisis-hit state ports and logistics monopoly Transnet will get a bail-out, with the National Treasury confirming that it has issued the group with “a support package of R47 billion to support a recovery plan, including meeting its immediate debt obligations," in a statement on Friday morning.
The National Treasury’s hand has been forced to make this emergency move with Transnet’s woes worsening in the last month, which has caused massive backlogs at most of South Africa’s ports in the middle of the busy festive season.
It comes just a month after Finance Minister Enoch Godogwana refused to give Transnet a bailout or any sort of support in his October medium-term budget.
"The Minister of Finance has concurred with the Minister of Public Enterprises [Pravin Gordhan] to issue Transnet with a R47 billion guarantee facility effective immediately, in support, of its recovery plan including meeting its immediate debt obligations. Transnet plays a central role in the South African economy and the government’s goal of inclusive growth..," the Treasury noted in its statement.
"In recognition of the seriousness of these challenges, the National Treasury and the Department of Public Enterprises have been working with Transnet to find a solution to the company’s immediate and longer-term problems, and the decision to grant the guarantee facility is a result of these discussions," it said.
"Government continues to pursue deep-running, broader reforms of the company and the logistics sector, as a whole. Without a comprehensive reform of the sector, rather than that of a single entity, we risk being faced with similar challenges in the future."
"The financial support package provided for the entity is a R47 billion guarantee facility against which Transnet will drawdown an initial amount of R22.8 billion to deal with immediate liquidity matters such as settling maturity debt."
Government and Transnet bosses are likely to insist that the move is not a state bailout, as it is not an equity injection.
However, Transnet has had no option, but to ask its sole shareholder for help, with its debt-burden ballooning to R130 billion and little access to further funding in the commercial markets.
