Transnet’s ‘audacious’ overhaul Transnet unveils the nuts and bolts of its "audacious" plan to invest R300bn in infrastructure NICKY SMITH Published: 2012/04/11 06:57:39 AM
TRANSNET yesterday unveiled the nuts and bolts of its "audacious" plan to invest R300bn in infrastructure, which it said would make its freight division the fifth-largest in the world.
By increasing Transnet’s capacity, the government hopes businesses will be able to trade more easily and cheaply with each other, and that exporters — particularly miners — will boost production to meet global demand.
With its new market demand strategy, a muscular Transnet will handle 350-million tons a year of freight, a 75% increase on its current rail capacity of about 200-million tons a year.
Transnet estimated its spending programme would create 588000 job opportunities and at least 15000 jobs at the company, CEO Brian Molefe said at a briefing on the strategy yesterday.
About 248000 indirect jobs and about 249000 additional job opportunities would be created in the economy, Mr Molefe said, describing the plans as "bold and audacious".
Large infrastructure projects were drivers of economic growth, Brait economist Colen Garrow said yesterday. "These types of projects have the ability to absorb large numbers of unskilled labour and re-equip them. Over a seven-year period I don’t think the (Transnet) figures are overly ambitious," he said.
The investment in rail, rolling stock and ports will transform Transnet, with earnings before interest, tax, depreciation and amortisation expected to triple to R68bn by 2018-19.
The bulk of the investment, about R151bn, has been earmarked for Transnet Freight Rail’s general freight business.
Transnet’s current market share of freight business was 33% and it expected to increase this to 45% by 2019, Mr Molefe said.
Mr Garrow said success would depend on the ability to spend and the pace at which it happened.
" We need to pick up pace on infrastructure, and Transnet and Eskom will take up the bulk of the budget for spend, but we need to start pushing a lot more aggressively," he said.
Relative to other government agencies, Transnet and Eskom were "hugely efficient" in spending their budgets, he said.
Mr Molefe said Transnet had spent 95% of its R21,5bn budget for the year ended March 31 last year. It had identified capital execution as one of the risks that threatened the market demand strategy’s success.
