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The South African government will inject 47 billion rand (2.3 billion euros) into the troubled state-owned Transnet group, which manages the port of Durban, the country’s largest port. The port is challenged by massive container congestion, which disrupts cargo movement.
The aid is in the form of a guarantee mechanism to help Transnet meet its debt repayments, which is anticipated shortly. Transnet has experienced significant operational, financial, and governance challenges in recent times. Some 15 freighters carrying 40,000 containers were still waiting to dock as of Friday (yesterday), compared with a peak of over 70,000 containers last week, according to the data provided by Mike Walwyn, director of the South African Association of Freight Forwarders (SAAFF).
The improvement was partly due to ships being redirected to Port-Louis in Mauritius. Transnet recently blamed congestion at the port of Durban, which handles around 60% of the country’s container traffic, on bad weather, which has exacerbated breakdowns, and aging equipment.
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The company, which in addition to managing South Africa’s ports also manages the rail freight network, will have immediate access to 22.8 billion rand to meet its repayments and other urgent needs. Transnet has long struggled with corruption scandals, theft, maintenance problems, and its 30 billionrand debt. The company posted an annual loss of R5.7 billion in its last financial year ending in March. Transnet’s huge debt means that it cannot borrow independently on the capital markets and is in desperate need of a lifeline. As South Africa heads towards general elections next year, the company’s problems can no longer be wished away.
