Transnet expansion plans gaining traction

(Image: Transnet)

Transnet is currently revamping and expanding its railways, ports and the Durban to Johannesburg fuel pipeline, in order to meet growing demands for more efficient transportation of goods and commodities such as coal, manganese and iron ore between the mainland and the coast.

Presenting the group's strategy on Tuesday, Molefe said the bulk of spending would go towards rail projects, and that R151bn had been earmarked to the general freight business, with the aim of ramping up volumes to 170 million tons per annum (mtpa) from the current 79.7 mtpa.

Molefe added that in the seven years, about R30bn would be allocated for the expansion of coal terminals with the aim of increasing exports from 68 mtpa to 97.5 mtpa, and that about R25bn would be spent on raising iron ore exports from 53 mtpa to 82.5 mtpa.

According to Molefe, the programme would also result in reduced cost to doing business, encouraging a shift in the transportation of goods from road freight system to railway freight system.

Surpassed the target

"We have improved rail transportation by 7.5%, and have already broken the 200 million ton target in rail transportation through Transnet Freight Rail," Molefe said.

Molefe said the strategy would also promote localisation, transformation and empowerment, and that R30bn would be allocated for the acquisition of locomotives from local industries.

A total of up to 588 000 job opportunities, direct and indirect, are expected to be created upon the completion of the infrastructure programme, in line with government's New Growth Path (NGP).

Regarding the funding requirements for the programme, Molefe said about 70% of the R300bn allocated, would be funded through its operating cashflow, while the balance would be raised through a mix of public capital raising measures.

Potential to expand exports

Malusi Gigaba Public Enterprise Minister said: "the market demand strategy is at the centre of our economic recovery efforts as well as further efforts to stimulate a vibrant economy that achieves high growth rates through creating jobs, facilitating industrialisation as well as regional integration.

Kevin Lings, economist at Stanlib said in a note that the infrastructure Transnet was planning to develop, had the potential to help expand exports as well as improve the efficiency of domestic business activity.

"Hopefully, the expansion by Transnet will become a trigger that encourages the corporate sector to systematically enhance their own expansion plans, especially given their strong balance sheets, providing a vital and sustainable boost to growth and employment," Lings said.