AfDB approves R18.5bn loan for Transnet

A Transnet Freight Rail train is seen next to tons of coal mined from the nearby Khanye Colliery mine, at the Bronkhorstspruit station, in Bronkhorstspruit, around 90 kilometres north-east of Johannesburg, South Africa, April 26, 2022. REUTERS/Siphiwe Sibeko/File photo

Transnet and the AfDB said in a joint statement that the 25-year loan was fully guaranteed by the government of South Africa.

"It will facilitate the first phase of the company'sR152.8bn ($8.1bn) five-year capital investment plan to improve its existing capacity ahead of expansion for the priority segments throughout the transport value chain," the statement said.

Transnet, which has debts of R130bn, recorded a loss of R1.6bn in the six months to 30 September on the back of declining rail, port and pipeline volumes as well as higher costs.

It has seen freight volumes decline to 150 million metric tonnes in financial year 2022/23 from 226 million tonnes in 2017/18.

Transnet's recovery plan, announced in October 2023, seeks to restore freight volumes and return the company to profitability over 18 months.

The turnaround plan includes splitting the freight rail subsidiary into two - an infrastructure management company and an operating unit. It also targets reduced port backlogs and plans another attempt to open up parts of its rail network to private operators after a false start two years ago.