http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.88Change: 0.00
R/$ = 12.57Change: 0.00
Au 1098.45 $/ozChange: 3.10
Pt 988.00 $/ozChange: 5.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jul 10, 2012

Too early to review R300bn capex plan despite poor economic outlook

Back
Transnet CE Brian Molefe on the long-term nature of the group's R300-billion capital investment programme. Camera Work: Nicholas Boyd. Editing: Darlene Creamer. Recorded: 10/7/2012
 
 
 
Engineering|Port|CoAL|Export|Pipelines|Ports|rail|Road|Transnet|Transnet Port Terminals|Service|State-owned Freight Logistic|Brian Molefe|Iron Ore|Iron-ore|Pipelines
Engineering|Port|CoAL|Export|Pipelines|Ports|rail|Road|Transnet|Transnet Port Terminals|Service||Iron Ore|Iron-ore|Pipelines
engineering|port|coal|export|pipelines-company|ports|rail|road|transnet|transnet-port-terminals|service|state-owned-freight-logistic|brian-molefe|iron-ore|iron-ore-person|pipelines
© Reuse this



State-owned freight logistic group Transnet says it is too early to say whether the current poor economic outlook will force it to review its R300-billion capital expenditure (capex) plans for the seven-year period to 2019.

CE Brian Molefe stressed, though, that the investment plan would not immediately respond to cyclical changes, owing to the fact that the programme was designed to cater for the growth of the business over a 30-year horizon.

Therefore, even under a worst-case scenario Transnet would continue to invest, with a “stress test” having indicated that, at most, R50-billion would be lopped off the capex plan should there be a period of sustained low growth.

In 2011/12, the group spent a record R22.5-billion, which was 3.7% up on the R21.5-billion invested in 2010/11. However, it was below the budget of R25-billion set for the period.

Molefe said the group still planned to invest a record R31.2-billion on railways, ports and pipelines during the current financial year, notwithstanding weaker market conditions in a number of areas.

Under the plan, capex was poised to rise steadily to a peak of R56-billion in 2016/17 and be funded through a combination of internal cash flows, as well as debt funding of about R85.5-billion.

“Whether we revise it as a result of market conditions it is still too early to say,” Molefe said, adding that, should conditions change materially, it would respond by either decreasing or adding to the programme.

“But what you must remember is that this capex programme is not about short-term cycles in markets. It’s a long-term capex programme, a 30-year capex programme, that we will try and execute in seven years.”

Transnet Freight Rail (TFR) was poised to absorb the lion’s share of R201-billion, followed by Transnet National Ports Authority (R47-billion), Transnet Port Terminals (R33-billion), Transnet Pipelines (R11-billion) and Transnet Rail Engineering (R4-billion).

The objective was to facilitate a dramatic increase in volumes across its businesses as well as support a transition from road to rail.

During 2011/12, rail volumes breach the 200-million-ton level for the first time on the group’s history, with general freight volumes rising 9.9% to 81-million tons, export coal volumes increasing by 8.8% to 67.7-million and iron-ore volumes surging 13.2% to 52.3-million tons.

The number of containers moved by rail increased 21.5% to 762 760 twenty-foot equivalent units (TEUs), from 627 825 TEUs, which allowed TFR to growth its market share to 34% from 30.9% in 2010/11.

At the ports, Transnet Port Terminals increased average moves per gross crane hour (GCH) by 8.1% to 26.6 GCH from 24.6 GCH in the previous period, which Molefe likened to a golfer improving his or her handicap by one stroke. “It may look trivial . . . [but] it takes a whole lot of activity to play just one shot less than the last time.”

Group revenue rose 20.9% to a record R45.9-billion, while earnings before interest, taxes, depreciation and amortization increased by 19.8% to R18.9-billion. However, profit for the year was lower at R4.12-billion, from R4.2-billion in the previous financial year, owing to higher depreciation, taxes and finance costs.

Molefe said the performance set a solid platform for Transnet to execute its R300-billion market demand strategy.

MINISTER CRITICAL

However, Public Enterprises Minister Malusi Gigaba called on the group’s board to address the area of customer service as a matter of priority, saying it impinged on the country’s global competitiveness.

“Notwithstanding the positive financial results I remain concerned about the enduring efficiency challenges within ports and rail, most notably the General Freight Business,” Gigaba said in a statement.

“It would be a fair expectation that considerable gains in efficiencies and volumes should have been achieved following the substantial R94.7-billion capital expenditure programme over the last five years.”

Significant emphasis should be placed on the area of customer service, with Gigaba describing the current quality of service as “unsatisfactory”.

He said customers remained unsatisfied about “high tariffs, unreliability, unpredictability and operational inefficiencies”.

“As the shareholder representative of this company, we have once more reiterated and underscored Transnet’s mandate to lower the cost of doing business,” Gigaba said.
 

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Video News
More
 
 
Latest News
Updated 11 minutes ago Providing capital growth fund Attacq with a 15-year project pipeline, the Waterfall City mixed-use development, in Midrand, has attracted a suite of corporates looking to consolidate their satellite centres into a single Gauteng foothold. Companies such as Massmart,...
Datatec CEO Jens Montanana
Updated 32 minutes ago Information and communication technology (ICT) group Datatec’s Logicalis subsidiary has moved to buy out US-based Advanced Technology Integration Group (ATIG) for $42-million from MCPc. The conditional acquisition of the system integration and professional services...
Updated 42 minutes ago A glitch in a law that would halt the issuing of vehicle licence discs to drivers with unpaid e-toll bills means non-compliant Gauteng road users won’t have anything to fear – for now. The Department of Transport’s Gazette 38997, released on 17 July 2015, referenced...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
Meyerton-based steel tank manufacturer Structa Technology is currently rolling out a water infrastructure build programme that supports local municipalities, water utilities, schools, hospitals and clinics. As a member of the Structa Group, Structa Technology proudly...
Alternative funding models could be expected to begin coming to the fore in South Africa’s renewable-energy sector as the market becomes more competitive and domestic development finance institutions (DFIs) begin scaling back their direct involvement in projects....
DIMITRI MARKOULIDES An innovation champion must involve employees in innovation projects and keep them updated to enable them to support and drive innovation and create the future of the business
An innovation champion course that trains executives to manage innovation in their organisations aims to help companies grow revenue streams and tap new markets, says business change management consultancy BMGI South Africa innovation practice lead Dimitri...
Future digital workplaces will require employees to continuously learn new “literacies”, including new media, information and technical skills, to help their company thrive and spur personal growth. Information technology (IT) research firm Gartner, thus, suggests...
Only 25% of large construction projects surveyed in KPMG’s Global Construction Project Owner’s Survey, released in June, were concluded on time and within budget over the last three years. “Every project owner wants predictability when it comes to large projects, and...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96