Transnet faces mounting pressure as R13. 5bn cash burn prompts reform calls
Image: Simphiwe Mbokazi/Independent Media
Business Leadership South Africa CEO Busisiwe Mavuso has slammed Transnet's continued financial collapse and resistance to reform, following a damaging credit downgrade by S&P Global.
Last week, IOL reported that the global rating agency downgraded the state-owned entity's credit ratings amid rising debt concerns and ongoing cash flow deficits.
The rating agency also reduced the company's long-term local and foreign currency ratings from BB- down to B+, while its standalone credit assessment slipped from 'b' to 'ccc+'.
In her weekly newsletter on Monday, Mavuso pointed out that the state-owned entity was burning through around R13.5 billion in cash annually and consistently failing to meet its freight volume targets.
"This downgrade is not just a reflection of Transnet's financial distress – it is a damning indictment of years of failed leadership, union militancy and a government that continues to bail out state-owned enterprises without demanding fundamental reform," Mavuso said.
She also noted that Transnet's financial difficulties are exacerbated by high fixed costs, significant capital expenditure requirements, and growing debt burdens, which have eroded investor confidence.
"Transnet is seemingly resisting change and moving too slowly. This compares to Eskom, which has been able to stabilise its operating performance and is pushing forward deep and fundamental reforms," she added.
"The solution is not more bailouts or government guarantees. It's time for the National Treasury to attach strict conditions to any future support"
Mavuso also added that Private sector partnerships in ports and rail concessions must be accelerated.
"Companies are ready to invest in our logistics infrastructure, but they need certainty that political interference and Transnet's resistance won't undermine their investments."
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