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The South African government said that it would inject 47 billion rands (2.3 billion euros) into the troubled state-owned Transnet group, which manages the largest port in the country Durban
The South African government said that it would inject 47 billion rand (2.3 billion euros) into the troubled state-owned Transnet group, which manages the largest port in the country, Durban. www.trendsnafrica.com has reported that the port has been suffering from massive container congestion. Transnet also manages the rail freight network.
The aid will take the form of a guarantee mechanism to help Transnet meet impending debt repayments. The port has been experiencing significant operational, financial, and governance challenges recently. Some 15 freighters carrying 40,000 containers were still waiting to dock as of last Friday, compared with a peak of over 70,000 containers last week. Some of the ships to be berthed in Durban are redirected to Port Louis, Mauritius because of the congestion.
Transnet recently blamed congestion at the port of Durban, which handles around 60% of the country’s container traffic, on bad weather, and aging equipment. The ailing company 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 R130 billion debt. The company posted an annual loss of R5.7 billion in its last financial year ending in March.
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There is political resistance to the bailout plan. The Democratic Alliance (DA), the main opposition party described the situation at the port of Durban as “disastrous” for the economy. It also said that the port of Richards Bay (east) is also in difficulties. As the country is going to the polls early next year, the incumbent government can ill-afford a drastic restructuring of the company under the public sector.
