There’s been improvement in operations, but the elephant in the room is its R130bn debt, costing R1bn a month in interest.
Under Transnet’s proposed new tariff regime, it will cost 2.5 times more to use rail than a truck from Cape Town to Johannesburg.
The proposed tariff is a clear sign that Transnet, and by implication, the government, is finally abandoning its core mandate of reducing the total cost of logistics as a percentage of transportable GDP.A calculation by University of Stellenbosch professor of logistics Jan Havenga estimates the cost of state capture at Transnet at about R60 billion, equivalent to half its total debt.
With these two elements in place, the remainder of the debt will have to be restructured using development bank finance that is repayable at low interest rates over 30 or more years.Then, Transnet has a fighting chance of trading its way back to solvency and opening its infrastructure to competitors under conditions that are favourable to all.
The extent of the maintenance required will only become visible once a complete and independent technical assessment of the entire Transnet rail network is done. But the evidence so far paints a horrendous picture of long-term neglect.
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