The Portfolio Committee on Public Enterprises says it is deeply concerned about the levels of theft and vandalism that have hit state-owned rail, port and pipeline company, Transnet, saying that the battle against criminality is being lost.
Transnet briefed the committee this week on its annual report and financial statements for the 2022/23 financial year, showing a massive spike in theft and vandalism over the last five years.
Security-related incidents of theft and vandalism of infrastructure increased by 179%, the group said, contributing to escalating revenue loss and repair costs.
According to the annual report, cable theft is a massive problem, with criminals stripping 1,121 km of cables in 2022/23. While this was down from the 1,500km of cable stolen in 2021/22, incidents have clearly been escalating.
Over 4,000 km of cables were stolen between 2018/19 and 2022/23.
Transnet said the financial impact of these problems amounted to R14.2 billion over the five year period – R4.1 billion of which was in the latest financial year. This includes revenue losses because of security incidents, security costs, and the cost of replacing the cables.
Criminals have also been hitting the SOE with fuel theft. While the number of incidents has trended lower over time, 2022/23 saw a jump in incidents (+20 cases) in the latest financial year. However, less product was lost.
Criminals stole 5.54 million litres of fuel, versus 6.06 million litres in 2021/22.
Committee chairperson Khaya Magaxa was alarmed to hear how much Transnet spends on private security.
In a previous meeting the committee had with organised labour, labour union representatives questioned the quality and capacity of the companies appointed by Transnet to protect its assets, Magaxa said.
The committee said that the battle against theft and vandalism is being lost, despite all efforts to address the problem. The low conviction rate of the perpetrators is also discouraging. The committee also noted with concern the underspending on capital projects, as this will also impact negatively on Transnet’s ability to generate revenue.
Another concern for the committee is that Transnet missed various targets in the year under review, in which 26.3% of targets were met in comparison to 38.6%, a decline of 12.3%.
The committee pointed out that a turnaround plan should ensure that recovery plans achieve tangible progress and said it would monitor progress in this regard as part of its oversight responsibility.
Committee members said the shareholder compact, which has not yet been signed, will have a tremendous impact on the ability of the department and the committee to do their oversight work.
However, Transnet said would not be able to achieve some of the shareholder targets due to various challenges within its operating environment.
Despite the myriad of issues plaguing the company, Minister of Public Enterprises, Pravin Gordhan, said that the government would not look towards privatisation as a solution.
However, given Transnet’s level of debt, the poor fiscal situation, and operating constraints, he said it is important to leverage private-sector participation and equity where necessary. This is to avoid the state losing control of key institutions and projects.
Transnet has indicated that it desperately needs financial assistance from the government to execute a turnaround. The group wants a debt transfer similar to what has been done with Eskom, with the rail group seeking R100 billion.
However, Treasury has shot this down, saying that Transnet first needs to get its affairs in order before such arrangements will be considered.