Transnet signs major deal with DBSA
TRANSPORT and freight logistics parastatal Transnet has signed a multibillion-rand deal with the Development Bank of Southern Africa (DBSA) to provide funding and expertise for its private sector participation programme.
The agreement, which was signed on Friday, will pave the way for the bank to share in project preparation funding, contribute to financial and management skills and capacity, and provide indicative terms and amounts to expedite the funding of the programme.
Although both the bank and Transnet could not disclose the exact value of the agreement, the utility’s chief executive Siyabonga Gama said it would involve the bank providing strategic support for Transnet projects, including the manganese common user loading facility in the Northern Cape, the Grootvlei coal loading structure in Mpumalanga and the Tambo Springs inland container terminal to be built in Ekurhuleni.
“Finding innovative funding solutions is a key element of the market demand strategy,” Gama said. “Partnerships with the private sector will not only broaden our source of funding for capital investments, they will also give us access to private sector skills and expertise.”
The agreement will allow DBSA to compete as one of the funders of Transnet programmes once a project is ready to go to the market.
It will also allow the bank to have a bigger say in Transnet’s market demand strategy, which is pillared on a rolling sevenyear R336 billion infrastructure investment programme.
The agreement comes in the wake of Gama’s appointment last month as Transnet’s acting chief executive, and his determination to revisit the company’s export business amid falling commodity prices and a weakened currency.
After his appointment, Gama said the company’s strategic goal during his tenure would be to intensify its most ambitious programme – to build 232 locomotives in the next few months, and to invest more than R300bn in infrastructure development to rejuvenate the economy, create jobs and address poverty and inequality.
Transnet Transnet is currently involved in expanding to almost double its capacity on its iron ore rail line. this would be channelled to Transnet Freight Rail to expand its railway infrastructure to create capacity and increase cargo volumes. Through this injection, Transnet Freight Rail will be able to optimise its capital portfolio, build a worldclass capital execution function and leverage capital procurement and localisation.
Transnet is currently involved in expanding to almost double its capacity on its South African iron-ore rail line as the state-owned operator looks beyond a slump in prices.
DBSA managing chief executive Patrick Dlamini said increasing private sector participation in infrastructure investment programmes was key to economic growth.
Transnet consists of five divisions; national ports authority, port terminals, rail engineering freight rail.
Last year Transnet reported 12.8 percent growth to R56.6bn during its financial results.
The company said its capital investment had increased by 15.6 percent to R31.8bn and that cash generated from its operations after working capital changes had jumped by 11.6 percent to R25.3bn.
Gama said the new partnership with the DBSA should be able to assist Transnet in prioritising its programmes and provide it with back-up skills and expertise where the company lacked them.