Hauling assets

WHOEVER EVENTUALLY is appointed as CE of logistics company Transnet will hardly have the luxury of steering it off a low base. Remarkably, Transnet continues to improve its performance and to function better despite having an acting CE for the past two years. After raising R20bn from capital markets during financial 2010, it provides a hopeful light in the dimness that can characterise State-owned enterprises. Certainly, other State-owned utilities could learn a thing or two from Transnet on how to plan ahead and rely on their own wits to fund planned infrastructure expenditure.

Over the next three years, Transnet – according to its annual report – aims to raise a further R38,9bn without Government assistance in order to support its ongoing R93,4bn capital expenditure over the next five years. The R23bn to be spent in financial 2011 will be the highest spent by Transnet over a 10-year capital investment programme that started in 2005, after which it will steadily reduce to R15,2bn by 2015.

The bulk of the money goes to Transnet Pipelines, whose cost has been revised upwards to R15,5bn and to be commissioned by 2012. The pipeline will double fuel capacity transported inland from Durban to 8,7bn litres. “It will reduce the need for road transport and ensure security of supply of petroleum products to the inland market safely and cost-effectively,” says Transnet.

Towards commissioning, the pipeline’s share of the capital expenditure cake will reduce and be overtaken by Transnet Freight Rail’s commodity rail lines – which will take up a total 59% of the R93,4bn. The bulk of the money will be spent on increasing capacity on the export coal line from the current 62m t to 81m t/year by 2015. “This increase is based on the requirements of existing clients and their projected future exports needs,” Transnet reports.

Transnet spends roughly half its budget on the maintenance of existing infrastructure, while also laying out new ones. It will add 110 new locomotives to its fleet by 2015. That’s in addition to the total 1 194 locomotives refurbished or added to transport coal and manganese over its past financial year.

When containers arrive at SA’s ports, they’ll also be serviced rapidly, as Transnet aims to reduce shipping delays and ship turnaround times in Durban and also increase ship turnaround times/hour by more than 20%/year for each of the next five years. Now if its board and shareholder can get their act together and appoint both a CE and a chairman...