Transnet on track to spend R17bn

According to the company's latest annual report, tabled in Parliament, Transnet has spent almost R12bn in capital investment in the year ended March 31 2007. This is the largest amount the company has ever spent in any one year.

Henceforth, the company faces a twin challenge: first, to hasten the efficient and effective rollout of the programme - on budget and on schedule; and second, to find appropriate funding solutions for it.

Maria Ramos, Transnet's Group chief executive, is confident that the parastatal, which is completing its transformation into a freight transport and logistics company, is now better positioned to meet the challenge of getting the planned investment programme to support volume growth and revenue increase.

In the reporting period, she named Moira Moses, formerly head of business reengineering, as group executive: Transnet Projects, the unit at the centre of Transnet's plans to invest the R78bn over the next five years. Elevating the post onto the company's main executive committee signals the significance the Company attaches to the programme.

With more than 2 000 employees around the country, the unit, incorporating Protekon, the company's erstwhile project management subsidiary, is in charge of mega projects - in other words, those above R300m - as well as repairs, maintenance and emergency assignments.

Its creation has freed divisional executives to concentrate on day-to-day operations of their businesses.

Among its early successes are:

• It has accelerated the pace of implementing the investment programme;
• Project conceptualisation, planning and design are of the highest quality;
• There is better co-ordination of the planning of the major capital projects in the company;
• There is greater focus on environmental issues throughout the project life cycle;
• There is adequate transparency in the projects; and,
• Technological skills and knowledge are being transferred to local and young professionals

The bulk of the spending will be in Transnet Freight Rail especially in optimising the performance of the general freight business - an area with massive growth potential which has, ironically, been constrained by past neglect.

Projects include:

• 110 locomotives for the coal line for Transnet Freight Rail.
• 212 locomotives for the general freight business of Transnet Freight Rail.
• Widening and deepening of the Durban Port's entrance channel.
• Construction of a new container terminal in Ngqura in the Eastern Cape.
• Expansion of the Cape Town container terminal.
• A new multi-product pipeline between Durban and Johannesburg to boost capacity from 2010.

Having concluded the restructuring of Transnet's balance sheet, the focus now shifts onto strategically managing the strengthened balance sheet to deploy it on raising in the debt capital markets the R25bn required to finance the investment programme.

Fred Phaswana, the chairperson, describes the Transnet challenge as follows: "Simply put, Transnet is faced with the challenge of having to put in place, and to finance, major integrated expansions of its operations over the next several years.

It can be done in a stable regulatory environment in which management's attention is not deflected from its proper role of managing our operations.

"We shall not expand willy-nilly - every single project will be subject to rigorous technical and financial criteria. We shall not invest in projects that do not offer appropriate returns. Transnet is, and should remain, a business founded on sound business principles."

- I-Net Bridge