Transnet ‘restructuring’means job cuts

Transnet chief executive Siyabonga Gama has confirmed that the state-owned enterprise has started to offer severance packages to employees as part of cost-cutting measures.

But he denied reports that the company intended to retrench at least 8 000 employees to address its financial constraints.

Gama said the so-called voluntary severance packages were part of ongoing restructuring, which also involved efforts to negotiate lower prices with suppliers and identifying new markets abroad.

“They [the Transnet employees] make a choice that ‘yes, I would like to leave’ and we make an assessment of whether the skills that they have are skills we will require going forward.

“If we think we will not require them we agree; if we think we will require the skills we will not agree to the voluntary severance package,” said Gama.

The “voluntary packages”, Gama said, did not necessarily equate to shedding Transnet’s employee base of nearly 60 000, because the company would still consider replacing employees with outdated skills with those who have digital proficiencies.

“We will continue to employ more people as we become more digital and we embrace the impact and the effects of the fourth industrial revolution. We will embrace new skills,” he said.

The restructuring comes after a difficult economic climate in the 2016-2017 financial year, which Gama said was “more severe than we thought”.

During the period, Transnet Engineering had produced only 100 wagons of the 4 119 it had planned.

It said the economy had caused a decrease in the demand for wagons from the Transnet’s freight rail unit, which in turn affected the local industrialists that were expected to supply the parastatal.

Geographically, Transnet had also started to restructure its sources of revenue — looking beyond South Africa’s borders to countries such as Nigeria, Zambia, Kenya and Benin for business.

“We had to take a different course and a different direction because the market required that we do not look at Transnet in the traditional sense that we had looked at it,” Gama said.

“There’s a few good things that have come out of the tough South African economic environment. We have had to say ‘let us diversify, let us look at new sources of markets, let us look at new sources of revenue’.” Dubai, on a stopover from Davos, to buy items for his daughter’s matric dance. He was then asked by Essa to stay the weekend.

“I was going to stop there and then he [Essa] asked me if I could stay there longer. I said I hadn’t really booked a hotel. I was just going to stop there, buy and then go straight into an aeroplane again,” he said.

“He booked, sent me a note saying this is the name of the hotel, the people from the hotel will pick you up from the airport. Then, when I left, I paid.”

His meeting with Essa was about Transnet’s contract with Regiments Capital, which had ceded some of its work for the parastatal to its breakaway company Trillian Capital, which is partly owned by Essa. The Trillian Capital and Regiments contract, according to Gama, was for the improvement of the freight business.

Gama cancelled the contract a few months after the Dubai meeting, because of “messy” legal battles between the two companies, which he said were harming Transnet.

“We said to them: ‘When you have a verdict or an outcome we will then read what the court tells us to do.’ That was the end of that,” he said.

Since Gama’s appointment Transnet has also refused to renew the freight rail utility’s contract with the Gupta-owned newspaper The New Age, whose business breakfasts the parastatal had partly sponsored.

Transnet also commissioned two internal investigations into alleged state capture at the parastatal. One is into alleged kickbacks paid by prospective Transnet suppliers to the Guptas in exchange for securing contracts.

The second is into a multibillionrand locomotives contract with China South Rail (CSR), which allegedly subcontracted Tequesta Group Ltd, a company owned by Essa.

It is alleged that from this agreement the Guptas and their associates benefited by R10-million for every R50-million locomotive Transnet bought.

In correspondence seen by the M&G, CSR denied having any agreement with Essa. The Chinese manufacturer claimed that, although Essa did show interest in the locomotives contract, no agreement was reached because of unhappiness with his payment expectations.

Essa, through his VR Laser, is said to have demanded 30% of the local content commitment of the multibillion-rand locomotive deal.

Gama said there was no need to suspend the contract pending the outcome of the probe.

“There is a process and that process may uncover other things. But you can’t then be required to stop the process just because somebody made an allegation. The allegation has been made and we take it very seriously,” he said.

“So we have taken the steps to make sure that we safeguard the interests of Transnet, but also we have to continue with the process to manufacture the locomotives.”