State-owned freight logistics group Transnet is considering plans to double its current R110.6-billion capital expenditure (capex) programme in a bid to ensure that rail, ports and pipelines capacity is developed ahead of demand, an executive committee member has revealed.
Transnet Port Terminals (TPT) CEO Karl Socikwa, who also sits on the group’s executive committee, has told a group of Johannesburg business people that discussions are under way on the possibility of more than doubling the size of the capex programme over the coming seven years.
The existing project pipeline, which is dominated by initiatives to recapitalise the rail business through the acquisition of new locomotives and wagons, is scheduled to be delivered over a five-year horizon from April 2011 to March 2016.
However, group CEO Brian Molefe has instructed his various divisional CEOs to consider ways of expanding the programme to around R220-billion over a seven-year horizon, to 2018.
Socikwa stresses that discussions are still under way and that any plan to scale up the investment programme will still require approval of the group’s board.
However, Molefe has indicated previously that South Africa’s freight logistics system needs to be materially expanded to position the country to meet its aspirational growth targets as set out in the New Growth Path, which aims to facilitate the creation of five-million new jobs by 2020.
Molefe has also signalled his intention in this regard by recently announcing that investments worth R6.1-billion, initially scheduled for delivery in the latter years of the five-year rolling capex programme, have been pulled forward into the first two years. Projects accelerated include the acquisition of 138 electric and diesel locomotives, the purchase of seven ship-to-shore cranes for the Durban Container Terminal, the purchase of new container handling for Maydon Wharf and Point, also in Durban, and new container handling equipment for the Ngqura container terminal.
In addition, Public Enterprises Minister Malusi Gigaba has stressed that there is a need to invest beyond levels that the Transnet balance sheet can currently accommodate and has suggested that new financing models, including public–private partnerships (PPPs), should be considered.
Molefe has established a PPP desk in a bid to understand the implications of such partnership on Transnet, which would evaluate such projects on a case-by-case basis.
Socikwa reports that Transnet accepts that PPPs will be essential if South Africa’s freight logistics system is to become a stimulant to economic growth and development, rather than a drag.
“Our door is open,” he adds, noting that even TPT, which has to bid to operate new terminal capacity against private operators, is keen to enter into partnerships.
In fact, he indicates that it could bid in partnership with private terminal operators for any new terminal capacity that could arise should the proposed dig-out port be developed at the old Durban International Airport site.
In addition, there was an immediate PPP opportunity to modernise and enlarge the grain handling facilities at the East London harbour. TPT recently invested R20-million into the facility, but believes that a further R250-million is required to match capacity with demand.