While the state-owned freight, rail and logistics company managed to generate a profit of R159-million, its rail operations continue to be unreliable for the mining sector, causing harm to the economy. While much of the attention is on Eskom’s debt problems, Transnet has its own.
The good news is that state-owned transport group Transnet managed to eke out a profit even though its operations were severely disrupted by the April floods in parts of KwaZulu-Natal and the Eastern Cape.
As investors and lenders took their working caps for the year and left for their various holiday destinations, Transnet released its financial results on Thursday, 22 December 2022, which showed that the company recorded a profit of R159-million during the six months to the end of September 2022. The floods occurred during this period, damaging Transnet’s railway lines, especially the Container Corridor, which is a key economic node to move freight between Gauteng and Durban.
Financial losses have become a permanent fixture in the state-owned entity (SOE) universe. And when companies in this universe generate a profit, it becomes an event.
Transnet was able to post a profit because it managed to free itself from debt repayments that were soon due to its lenders by deferring them to a later stage. It also deferred tax payments worth R271-million. These factors allowed Transnet the space to enjoy the revenue it generated from its freight, rail and logistics operations without shelling out large amounts to service debt obligations and pay the taxman.
Now for the bad news. A further look at Transnet’s latest results shows how the company is battling to reform its operations, especially its rail network.
Transnet’s operations are a crucial cog in South Africa’s economy. They are responsible for moving most of the iron ore and coal that is produced in the country and then taken around the world. Transnet also has a major role in carrying freight and fuel around the country and helping importers land their goods at ports. When Transnet isn’t operating properly, many businesses and South Africa’s exports come to a standstill.
But exporters are facing major problems in railing their goods to market and this can be seen at Transnet Freight Rail, the largest division at Transnet which generates most (45%) of the R36.1-billion in revenue at the SOE.
Transnet Freight Rail’s revenue, which is generated from the contracts it mainly has with the mining sector, fell by 5.5% to R18.7-billion during the ...