http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.25Change: 0.06
R/$ = 11.29Change: -0.01
Au 1207.71 $/ozChange: -0.98
Pt 1292.00 $/ozChange: -10.00
 
 
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 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|Pipelines|Ports|Road|Transnet|Transnet Port Terminals|Service|State-owned Freight Logistic|Brian Molefe|Iron Ore|Rail|Pipelines
Engineering|Port|CoAL|Pipelines|Ports|Road|Transnet|Transnet Port Terminals|Service||Iron Ore|Rail|Pipelines
engineering|port|coal|pipelines-company|ports|road|transnet|transnet-port-terminals|service|state-owned-freight-logistic|brian-molefe|iron-ore|rail|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 Transport & Logistics News
A recent study by the South African Chamber of Commerce and Industry (Sacci) has shown that the service quality of the South African National Roads Agency Limited’s (Sanral’s) e-toll system was mostly poor regardless of the level of interaction or the user’s...
DigiCore Holdings announced a turnaround in fortunes on Tuesday, with the telematics specialist reporting profit after tax for the year ended June 30 of R7.8-million, compared with a loss of R59.4-million in the previous financial year. Revenue for the year reached...
Brian Molefe and Jon Evans
South African rail utility Transnet signed its first long-term take-or-pay agreement with a domestic coal exporter on Tuesday, when it inked a ten-year, R24-billion deal with BHP Billiton Energy Coal South Africa (Becsa) at a ceremony held at Esselenpark, east of...
More
 
 
Latest News
Information and communication technology services group Gijima on Tuesday announced that it would undertake a rights offer and restructure its existing trade receivables securitisation funding programme to ensure that it had sufficient working capital to underpin the...
Lynne Brown
Public Enterprises Minister Lynne Brown has urged that the best candidates be nominated to serve on the boards of State Owned Entities (SOEs). “Help me identify your brightest and our best,” said Minister Brown as she launched an initiative to obtain the best pool of...
The Square Kilometre Array (SKA) has brought art and science together in an exhibition celebrating ancient humanity’s appreciation of the night sky. In a first for the SKA Organisation, indigenous and local artists from South Africa and Australia have collaborated in...
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
The South African new vehicle market is likely to reach around 630 000 units in 2014, down from the 650 000 units recorded in 2013, says Toyota South Africa Motors (TSAM) president and CEO Dr Johan van Zyl. Van Zyl is also president of the National Association of...
Efforts by the Kenya government to increase energy generation by 5 000 MW over the next three years received a major boost following the award of a $2-billion contract to build a coal power plant in Lamu.  Despite allegations of irregular tendering process, the...
Using crafty wordplay on a well-known Internet meme, brilliant South African-born US entrepreneur and businessperson Elon Musk announced that Tesla Motors would not initiate patent lawsuits against anyone who, in good faith, wanted to use its technology. Instead,...
August new vehicle sales declined by 1.4%, to 55 722 units, compared with the same month last year. Assisted by the car rental market, the South African new passenger car market, at 37 953 units, contracted by 1 047 units, or 2.7%, compared with August last year.
With South Africans facing the challenge of reducing electricity consumption, the biennial Eskom Energy Efficient Lighting Design Competition, to encourage the integration of energy efficient lighting in architectural, engineering and interior design, received a...
 
 
 
 
 
 
 
 
 
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