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Transnet balance sheet to fund projects

Feb 10 2012 08:01 James-Brent Styan

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Cape Town – Transnet’s new expanded capex programme will be funded entirely from the company's balance sheet.

Brian Molefe, CEO of Transnet, was pleased that President Jacob Zuma put the parastatal at the centre of a massive new infrastruce development plan in his State of the Nation address on Thursday night.

Zuma announced that Transnet's capital expenditure will increase from R110bn over the next five years, to R300bn over the next seven.

“The money’s there,” Molefe told Fin24.

“Transnet’s performance is improving, we think we can do it and remain within the necessary gearing ratios.”

Molefe wasin the public gallery while the announcements were being made.

“I’m very happy tonight,” Molefe told Fin24, laughing loudly as the national gallery emptied out into the quad in front of parliament.

Molefe said Transnet had been working on the plans to expand its capex programme since last year, working closely together with minister of public enterprises, Malusi Gigaba.

Molefe said the money will be used, amongst other things, to build new locomotives locally.

“A lot of the money will go to the improvement of rail in South Africa. This will increase expansion of rail lines to the Waterberg area. There will also be money for the ports.”

Gigaba told Fin24 that government had taken the decision to increase Transnet’s capex to R300bn  in mid-2011 already.

“Government doesn’t have to spend a cent on this (Transnet) capex expansion.  It will be funded completely out of the balance sheet of Transnet. It shows the strength of the organisation at the moment. There is quite an exciting phase ahead of us,” Gigaba said, dressed in his 49m campaign shirt, a project that calls on South Africans to use electricity sparingly.

President Zuma’s announcements on Transnet were broadly welcomed. Opposition parties said it’s good to see government planning infrastructure projects that will lead to positive returns for the country down the line.

 - Fin24 

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