TRANSNET’S board said on Saturday it had developed a turnaround plan that it would submit to its shareholder, the government, this week, and that it would also ask for additional funding to support its operations.
On Friday, the Presidency clarified misleading reports saying: “Inaccurate media reports have created the impression that the Presidency seeks to place Transnet under private control. This is not the case.
“South Africa’s port and rail infrastructure are strategic national assets and government has taken a clear stance that they will remain in public ownership.”
Media reports were leaked that among other plans, the Presidency aimed to set up an independent port and rail regulator and a rolling stock leasing company, which would be a venture with a private company. Transnet would become a holding company with subsidiaries in which stakes may be sold to private companies, the reports claimed.
The conclusion of the turnaround plan comes increasing signs that the country’s biggest logistics utility is running aground under a load that includes financial losses, operational difficulties in rail and at the ports, shortages of equipment including parts and locomotives, an inability to deal with theft and fraud, and the resignations in the last two weeks of its CEO, CFO and the CEO of its biggest operating unit, Transport Freight Rail.
Both business and labour organisations have called for urgent action to be taken. On Saturday, Minister of Public Enterprises Pravin Gordhan announced Transnet board member Popo Molefe would resign.
Gordhan had previously given Transnet a month to come up with a restructuring plan.
Transnet chair Andile Sangqu said in a statement over the weekend: “The representative of the board will meet next week with the shareholder ministry as well as the Ministry of Finance to discuss the operational and financial details of the business turnaround plan, including areas that require immediate government support.”
He said once approved by the shareholder and the funding commitment was secured, the plan would be discussed with stakeholders such as organised labour, employees, customers and lenders.
The plan apparently outlines operational and financial initiatives that must be implemented in the next 6, 12 and 18 months to stabilise the business and position the company for growth.
“The turnaround is predicated on several detailed goals to reform and strengthen the operational state of the freight rail division in particular, and with priorities of key elements, specifically the rail corridors that service key sectors of the economy,” he said.
Transnet said the turnaround plan was premised on principles of balancing of the financial stability and the operational performance of the business, improved utilisation and care of operational assets and infrastructure, improved integration and operation execution across operating divisions and better employee engagement and visible management at operations.
Other aspects included the development of a deeper accountability framework, cost reduction measures, cash flow and working capital improvements, and better engagement and collaboration with stakeholders, including organised labour, customers, funders, government and industry.
Filling the three executive positions was being prioritised, and the recruitment process had started last week, the chairman of the board said.
He said the board also continued to work closely with stakeholders, including the National Logistics Crisis Committee and further updates would be provided in coming weeks.
BUSINESS REPORT