SOUTH AFRICA – The Citrus Growers’ Association of Southern Africa (CGA) has called on South Africa’s Finance Ministry to prioritize Transnet’s financial recovery by granting their R100-billion (USD 5.2 million) bailout request in this year’s Medium-Term Budget.
CGA says Transnet is the backbone of the country’s export economy and deserves immediate attention from the government.
The association cautions that, if this support is granted, it should be conditioned on the further expansion of public-private partnerships in rail and port projects.
Other stakeholders such as North-West University Business School Professor Raymond Parsons and Nedbank, however, have bemoaned the fact that the State continues to provide bailouts to State-owned entities.
But CGA still insists on the need for more private sector involvement, such as the selection of International Container Terminal Services for the upgrading of the Durban Container Terminal Pier 2, is key to a turnaround at Transnet.
Freight rail offers citrus growers, for one, significant advantages in getting produce to ports, however, owing to the decay of the rail network, 95% of all fruit in South Africa is currently transported by truck.
“The additional 100-million 15 kg cartons of citrus that will need to be moved from orchards to ports over the next nine years will be at risk without a functional rail network,” outlined CGA.
This growth in the citrus industry will translate to 100 000 jobs being created and an additional R20-billion (USD 1.35 million) in yearly revenue for the industry.
The CGA says South Africa’s roads simply cannot handle these additional volumes, since the industry makes about 900 truck trips a week to the Durban port in peak season.
South African ports currently move an average of 16 containers an hour, compared with the European and Middle Eastern averages of 33 and 43 containers an hour.
“We hope Godongwana’s policy statement will be clear on Transnet’s central role in our economy and that government will provide the entity with the support it requires – with the understanding that public-private partnerships should be expanded without delay,” the CGA concludes.
According to recently published news article by CNBC, Tansnet’s underperformance has seen freight volumes decline to 150 million metric tons in 2022/23 from 226 million tons in the 2017/18 financial year.
Transnet has R130 billion (USD 8.7 billion) in debt and recorded a loss of R5.7 billion (USD 53.4 million) in the financial year to March.
Its turnaround plan includes splitting the freight rail subsidiary into two – an infrastructure management company and an operating unit.
The company will make another attempt to open parts of its rail network to private operators after last year’s false start.
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