State-owned rail and ports operator Transnet said its full-year loss widened as theft and vandalism resulted in muted growth in shipments and as it provided for lawsuits.
Transnet posted a loss of R7.3-billion for the year to March 2024, compared with a restated R5.1-billion loss in 2023. Its freight-rail business — the largest operating unit accounting for 44% of revenue — delivered 151.7 million tons of cargo during the period, up 1.5% from the prior year. Pipeline volumes fell 2%, while port-container movements improved 2.9%, it said.
“Collisions, derailments, community unrest on the coal line and equipment availability on the ore line” affected volumes, the company said in a statement on Monday. “High levels of cable theft as well as infrastructure vandalism” also affected the rail business, it said.
A court in June ordered that Transnet pay Sasol and TotalEnergies R6.2-billion in damages, alleging that the state-owned company overcharged the firms in an alleged breach of a 1991 oil pipeline contract. Transnet said it has provided R9.3-billion in its accounts for the claim, interest and legal fees, and appealed the decision on 8 July.
Transnet is almost a year into a turnaround strategy that it announced in October 2023 to overhaul its rail and port services and tackle the impacts of years of mismanagement, theft and vandalism. The challenges, including underinvestment in infrastructure and equipment, and external shocks including floods and extreme weather events, have added to operational problems.
The company’s management said the plan is starting to bear fruit, with further improvements in rail volumes expected in the current financial year.
Support package
Transnet, with total debt of R226.5-billion, has repeatedly said its turnaround and growth plan needs significant capital to implement. That led to national treasury providing the entity with a R47-billion support package.
The auditor-general, which verified Transnet’s accounts, said “material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern”.
Read: Tech sector feeling impact of Transnet ports chaos
Last week, the New Development Bank — a lender formed by the Brics group of economies — granted Transnet a R5-billion loan. It will use the funds to modernise and improve South Africa’s freight-rail network.
The African Development Bank in July approved a loan of R1-billion for the first phase of the company’s five-year capital investment plan that requires R152.8-billion. — Ntando Thukwana, with Paul Burkhardt, (c) 2024 Bloomberg LP
