Massive loss for Transnet – BusinessTech

South Africa’s state-owned rail and ports operator said its full-year loss widened as theft and vandalism resulted in muted growth in shipments and as it provided for lawsuits. 

Transnet SOC Ltd. posted a loss of R7.3 billion rand ($408 million) for the year through March 2024, compared with a restated R5.1 billion loss in 2023.

Its freight-rail business — the largest operating unit accounting for 44% of revenue — delivered 151.7 million tons of cargo during the period, up 1.5% from the prior year. Pipeline volumes fell 2%, while port-container movements improved 2.9%, it said. 

“Collisions, derailments, community unrest on the coal line and equipment availability on the ore line” affected volumes, the company said in a statement Monday.

“High levels of cable theft as well as infrastructure vandalism” also affected the rail business, it said. 

A court in June ordered that Transnet pay Sasol Ltd. R6.2 billion in damages and interest and TotalEnergies SE almost R3 billion, saying that the state-owned company overcharged the firms in an alleged breach of a 1991 oil pipeline contract. 

Transnet said it has provided R9.3 billion in its accounts for the claim, interest and legal fees, and appealed the decision on July 8.

Transnet is almost a year into a turnaround strategy that it announced in October 2023 to overhaul its rail and port services and tackle the impacts of years of mismanagement, theft and vandalism.

The challenges, including underinvestment in infrastructure and equipment, and external shocks including floods and extreme weather events have added to operational problems. 

The company’s management said the plan is starting to bear fruit, with further improvements in rail volumes expected in the current financial year. 

Transnet, with a total debt of R226.5 billion, has repeatedly said its turnaround and growth plan needs significant capital to implement. That led to South Africa’s National Treasury providing the entity with a R47 billion support package.

The Auditor General of South Africa, who verified Transnet’s accounts, said, “Material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern.”

Last week, the New Development Bank—a lender formed by the BRICS group of economies—granted Transnet a R5 billion loan. The funds will be used to modernize and improve South Africa’s freight-rail network.

The African Development Bank in July approved a loan of R1 billion for the first phase of the company’s five-year capital investment plan that requires R152.8 billion.

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