Transnet launches a subsidiary
TIH to facilitate rail, port, pipeline projects
TRANSNET has launched a new company Transnet International Holdings (TIH) to facilitate multiple rail, port and pipeline projects in the rest of Africa.
TIH, which has a capital injection of R100 million, held its inaugural annual general meeting this week to, among others, appoint a board.
According to Transnet chief executive Siyabonga Gama, the new entity would commence trading on April 1.
Gama said TIH would not be a burden on Transnet’s balance sheet. “The idea is to ring fence TIH to make sure that it does not take risks that are not managed,” he said.
Gama said that TIH would have to leverage the R100m “and see how from a structured finance perspective they are able to bring in different partners. The key issue is to have projects that can run on their own and are feasible.”
Khaya Ngema was the group executive responsible for overseeing TIH, while Petrus Fusi, Transnet’s general manager for cross-border strategy, is the new chief executive of TIH.
Transnet board of directors, the Department of Public Enterprises and the National Treasury have already approved the establishment of the company.
Gama said Transnet’s plans to diversify had long been on the cards. In terms of its new strategic blueprint, called Transnet 4.0, the entity prioritised geographic diversification “using the core competencies of port, railway, pipeline and gas. How do we assist other countries in terms of regional integration? That is the space that TIH is going to be in.”
Ngema said the Transnet 4.0 strategy required the logistics group to participate in the broader logistics value chain.
The company was currently executing a number of projects in certain African countries such as Nigeria, where it had major rail projects. But the parastatal was looking beyond individual projects.
Gama said Transnet had identified a total of 18 countries for growth opportunities. He said TIH had given itself seven years to establish a presence in the 18 countries.
He said TIH was cognisant of risks such as inability to repatriate funds and changes in currency.
“Political stability is an important aspect. That is why in a continent with 54 countries, we think we are comfortable to start with 18,” said Gama.
Fusi said the first wave of projects were ready for implementation. “(In terms of governance), they are sitting with the Minister of Finance for concurrence and Minister of Public Enterprises for approval in terms of the Public Finance Management Act,” he said.
Transnet last month handed mainline locomotives, wagons and passenger coaches to National Railways of Zimbabwe (NRZ) in a transaction valued at more than R2 billion. This followed a public tender by NRZ for its recapitalisation.
Fusi said the handover of the assets was part of the interim solution for Zimbabwe.
He said Transnet wanted to conclude the Zimbabwe transaction by the end of July. He said in Zambia TIH was part of the revitalisation of the Zambian Railways.
He said this entailed leasing locomotives and wagons to Zambia Railways in order to boost its capacity to handle bulk cargo. He said the costing of the revitalisation was not complete, but was expected to be approximately R100m.
“The infrastructure is in bad shape,” he said. In Nigeria, TIH was part of a consortium in a $2bn railway concession project. Other members of the consortium are General Electric, Dutch-based APM Terminals and China’s Sinohydro Consortium.
“We are negotiating a 30-year concession,” he said.
The project entails overhauling that country’s ageing railway system and covers two lines – one from Lagos to Kano in the north and another from Port Harcourt to Maiduguri.