The government has not closed the door to granting state ports and rail company Transnet a bailout, Finance Minister Enoch Godongwana told a media briefing ahead of his medium-term budget speech on Wednesday.
“But we are not opening it. We will not close the door. We are realistic that at some point we need to find a solution to Transnet,” the minister added.
Transnet has asked the treasury for more than R100 billion, as it buckles under its R130 billion debt, according to news reports. The state-owned entity’s debt has hamstrung its ability to invest in its turnaround. But the medium-term budget policy statement (MTBPS) tabled on Wednesday makes no mention of a future bailout.
During his speech Godongwana noted that rail underperformance is estimated to have cost up to 5% of GDP, with losses in the region of R50 billion in the minerals sector alone.
“No modern economy can thrive and grow new industries if rail lines are beset by delays and ports are unable to efficiently handle incoming and outgoing cargo,” the minister said.
“Transnet’s performance has been underwhelming and its operations have been strained by a worsening financial state.”
For this reason, the treasury is working with Transnet and the department of public enterprises to ensure that the entity can meet its immediate debt obligations, Godongwana added.
Earlier in Wednesday’s media briefing Godongwana noted that the treasury had not factored in a bailout in the MTBPS. “They came to us a couple of weeks ago with an invoice,” he said.
“So we made the point which I want to emphasise, one of the lessons that we have learned so far on the bailouts is when people give us an invoice a bailout means they must sort things out. On the basis of trust, we give money.”
This time around, the minister said, Transnet will not receive bailouts until the government is satisfied that the Freight Logistics Roadmap is being adhered to.
“One thing we are not going to do is, Transnet is trying to bargain with us via the media … We are going to avoid the temptation of responding to them in the media,” Godongwana said.