Transnet tones down jobs forecast

Parliament - Transnet CEO Brian Molefe told MPs on Tuesday the transport utility's R300bn expansion programme will put 220 000 jobs into the economy, not well over 500 000 as reported.

"We will create employment for 588 000 people (but) I must qualify this," Molefe told parliament's portfolio committee on economic development.

The figure would include the current total of 368 000 jobs linked to Transnet's operations. This consists of 59 000 jobs within the company, 145 000 indirect jobs and 164 000 in the wider economy.

"At the moment our impact in the job market as Transnet is about 368 000 people... by 2016/17 at the height of the MDS (market demand strategy) the additional jobs that will be created is 220 000.

"I think in the past this was published as if we will create 588 000 new jobs, but it is job opportunities in 2016/17 in the economy as a result of our activity."

Molefe said Transnet hoped to create 15 000 direct jobs - bringing its staff component up to 74 000 -  and to spend R7.6bn on training in the seven years spanning its expansion programme.

He reiterated that some 70% of the programme to expand rail, port and pipeline infrastructure would be funded from the company's operating profits. The rest would be sourced from the capital markets.

"The R200bn will be funded from the reinvestment of our profits. The R87bn, or R86.5bnn over a seven-year-period, will be funded in the markets."

In the current financial year, Transnet's borrowing requirements will be about R14.1bn, he added.

It will escalate to R15.6bn the following year and peak at an unprecedented R20.5bn in 2015/16.

In that year, 20% of the money was expected to come from commercial paper, 34% from domestic bonds, 29% from development finance institutions, the export credit agencies and a general medium-term note, and 17% from bank loans and other forms of finance.

Molefe was confident there would be no obstacle to raising the money.

"We will get the bulk of our money from the domestic and international markets, commercial paper and domestic bonds.

"And we will get money from foreign development finance institutions, export credit agencies and global medium-term loan programme.

"We have already established benchmarks in the euro market and the dollar market. If these sources of funding are not enough we will consider a second issuance of GMTNs (general medium-term notes), we will consider private placement or we can do fellow funding with export credit agencies.

"So we don't think there is a problem in the funding."

Molefe said by the seventh and final year of the infrastructure expansion drive Transnet will have a negative funding requirement, or positive cashflows of about R7.1bn.

The projects to be concluded by then include expanding port facilities in Durban, Richards Bay, East London, Ngqura and Saldanha, completing a multi-product pipeline and maximising the iron ore export corridor, the export coal line and the manganese rail network.