State-owned transport utility Transnet has officially approved an enlarged five-year capital investment plan, which should see it investing some R93,4-billion over the five-year period until 2015.

The previous five-year figure to 2014, involved an investment allocation of R80,5-billion, into the freight logistics group's railways, harbours and pipelines business.

Acting CEO Chris Wells has acknowledged, however, that about one-third of the increase related to price escalations on its existing project pipeline, with the balance arising from new projects, as well as scope changes.

The expansion of coal and iron-ore commodity lines would feature strongly in the five-year plan, as would a plan to enlarge South Africa's manganese export potential.

Wells also indicates that the group has finalised its approach to private participation in its project pipeline and/or existing operations, and was canvassing the model with government.

Three approaches would be adopted, including:

• Options for entirely yielding to private investors in areas that remain core to Transnet, but where it was unable to invest itself, such as in key branch lines on its railways network.
• Creating an opening for private firms to invest in specialist equipment, which would typically be used for the benefit of a single customer, such as chemical wagons.
• Public-private partnerships in areas where Transnet was keen to invest, but lacked the financial capacity to do so, such as on some of the commodity export channels.

"Driving this philosophy, is a desire to build capacity ahead of demand, while ensuring that we are not a constraint to improving the competitiveness of South Africa's freight-logistics system," Wells explains.

The group has also aligned its fund-raising plans to this new expanded pipeline and currently had some R7-billion of cash on hand, in line with its philosophy of raising money opportunistically ahead of need.

The group expects to tap its recently established $2-billion Global Medium-Term Note (GMTN) programme within the next six months, with the initial foray likely to be for a minimum of $500-million, but probably for $750-million.

Transnet's GMTN was listed on the London Stock Exchange in early February, enabling the company to issue bonds in either the US or the European debt capital markets, without having to undertake the costly pro-cesses associated with preparing separate bond listings.

The company is planning roadshows in both the US and the UK to assess investor appetite for the debut issuance, which will also be the first by a South African State-owned enterprise for a number of years, without an explicit government guarantee.

Transnet plans to raise about R35-billion in the medium term to fund investments into projects such as the expansion of the coal and iron-ore rail channels; the enlargement of the Cape Town harbour's container terminal; the creation of the Ngqura port and container terminal; the port channel widening at Durban; a new multiproduct fuel pipeline from Durban to Johannesburg; and the procurement of up to 500 new locomotives.