Transnet R80bn plan on course

TRANSNET, one of the only parastatals not begging government for billions in funding, remains committed to its R80,5billion capital investment programme despite the economic crisis and lower net profits.

Acting chief executive Chris Wells confirmed that the freight and logistics group had the capacity to raise the funds for its infrastructure development.

In the past financial year it invested R19,4billion, 56percent of which was spent on expanding capacity and the rest on maintaining its infrastructure and assets.

Despite the credit crisis, Transnet raised R11,6billion by issuing domestic bonds and local and international loans.

It is also about to launch a global medium-term note programme which gives it access to US and European debt capital markets as soon as conditions become favourable.

Wells said it had been a tough financial year to end-March, especially in the second half.

The 11percent rise in revenue to R33,6billion reflected lower volumes which were offset by higher coal tariffs. The first half of the financial year was good in comparison with the second. Rail volumes dropped 19percent in the second half, while container volumes at the ports dropped 12percent.

Operating costs were 18percent higher, reflecting the higher cost of fuel, electricity and steel.

"On the face of it it was financially a good year," Wells said, "but the real concern is on the volume side, where the decline was caused partly by the economy and partly due to operational issues."

Transnet has, however, responded to the economic downturn with a plan which includes weekly reports on various areas of the business, cost reduction and the delay of some projects.