Ramaphosa turns his attention to South Africa’s other state-owned crisis
President Cyril Ramaphosa has directed that the national logistics company Transnet implement swift reforms to fix the crisis it finds itself in.
Transnet has been on a downward trajectory for years and, alongside the embattled Eskom, has dragged down economic growth expectations in the country.
Performance at the state-owned logistics and rail company reached a 30-year low in 2022, specifically regarding coal arrivals at South Africa’s main export port.
In February, Neal Froneman, the CEO of Sibanye Stillwater, said that all trajectories for Transnet look bleak. The situation at the company has been declared a crisis by various stakeholders, including the country’s mining giants.
Ramaphosa has now turned his focus to the group, meeting with the company’s board and executive management on Tuesday (28 March) to discuss its challenges, including its rail network’s declining performance.
The president said that the company needs fundamental structural reforms to improve its efficiency and competitiveness in the long term.
“There is work underway between the various departments to finalise this roadmap, coordinated by Operation Vulindlela, and I would like this process to be completed as quickly as possible,” said Ramaphosa.
The president added that one of the most notable reforms is to enable third-party access to the freight rail network by private rail operators while the network itself remains in the ownership of the state.
He said that progress has also been made to establish a separate Infrastructure Manager within Transnet Freight Rail by October this year as a crucial step towards creating a level playing field for public and private operators.
Transnet must ensure sufficient rolling stock to increase the volume of goods transported by rail, upgrade infrastructure in rail and ports, address security challenges and implement reforms to enable private sector investment, said the president.
Gordhan put on a mission
Following Ramaphosa’s plea for a swift turnaround at Transnet, the minister of public enterprises, Pravin Gordhan is set to travel to China in April to discuss an impasse that has blocked the delivery of key spare parts that Transnet needs.
According to Bloomberg, Gordhan will meet his Chinese counterpart to discuss the failure of a unit of Chinese state-owned CRRC to meet requirements set by South Africa’s central bank and tax authority, state-owned ports and Transnet.
Before the current halt on parts, the two companies’ relationship was strained because Transnet sought to cancel an R54 billion deal to buy roughly 1,000 locomotives from the Chinese firm.
CRCC hit back by withholding spare parts, forcing Transnet to withdraw more than 300 locomotives from service, Bloomberg reported.
“A key requirement for CRRC to continue doing business in South Africa is the normalisation of its relationship with key regulatory authorities — the South African Reserve Bank and the South African Revenue Service.
“Up to now, the Chinese original equipment manufacturer has declined to do so,” said a statement on Tuesday.
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