The National Treasury provided Transnet with a financial lifeline of R47 billion on Friday to aid the state-owned rail and ports company in meeting its pressing debt commitments. Transnet has faced challenges in delivering sufficient freight rail and port services in South Africa due to a lack of investment, resulting in equipment shortages and maintenance backlogs.

By Staff Reporter

Enoch Godongwana, the Minister of Finance, has agreed to provide financial aid to Transnet in response to the company’s request for assistance. The minister has announced a support package of R47 billion for the state-owned freight and logistics company, which is currently facing operational and financial challenges.

The financial assistance of R47 billion provided to Transnet has been described as a “guarantee facility” by both the National Treasury and Godongwana. This support is anticipated to support the company’s logistics turnaround plan and alleviate its current debt obligations.

The Treasury’s provision of financial assistance to Transnet represents a reversal of Godongwana’s stance regarding SOEs. On November 1, when he unveiled the Medium-Term Budget Policy Statement, Godongwana reaffirmed the importance of demonstrating “tough love” to failing state-owned enterprises (SOEs), stating that the era of continuously providing them with survival bailouts will end — particularly for SOEs that fail to provide substantiated evidence of operational reforms.

Godongwana unequivocally stated that he would not even contemplate a state-owned enterprise (SOE) bailout for Transnet until the latter embraced and executed the government’s novel strategic plan to revolutionise the logistics industry in South Africa.

He may have reassessed his stance and developed a more favourable opinion of Transnet in light of the company’s board’s recent announcement of a strategy to overhaul its logistics operations.

Similar to the debt relief measure offered to Eskom, the board of Transnet unveiled a turnaround plan last month that requires financial assistance over R100 billion from the Treasury. The plan consists of an R47 billion equity injection and the government taking over R61 billion of the SOE’s debt. The turnaround strategy is predicated on Transnet forming delivery partnerships with the private sector for its rail and port operations and reorganising its balance sheet through the government-assisted settlement of suffocating debt.

The Treasury stated that the guarantee facility for Transnet will be subject to stringent conditions, including the SOE investigating alternative funding models for infrastructure and maintenance needs, reducing the current cost structure, and investigating further the divestment of non-core assets. The latter comprises concessions, joint ventures, project financing, and third-party access, among others.

“The financial support package provided for the entity is a 47 billion rand guarantee facility against which Transnet will drawdown an initial amount of 22.8 billion rand to deal with immediate liquidity matters such as settling maturity debt,” the National Treasury and Department of Public Enterprises said.

The National Treasury and Department of Public Enterprises stated, “The financial support package provided for the entity is a R47 billion guarantee facility against which Transnet will drawdown an initial amount of R22.8 billion to immediately deal with liquidity matters such as settling maturity debt.”

Andrew Bahlmann, Chief Executive of Deal Leaders International’s corporate and advisory arm, told Reuters that the government had no choice but to bail out Transnet, “given the appalling impact that Transnet’s incapacity has on the economy and particularly our vital export markets.”

“The business and investment community will expect to see some immediate improvements in port delays and rail performance to feel the financial package is justifiable or just good money thrown after bad,” Bahlmann said in a note.

In an interview with, Road Freight Association (RFA) CEO Gavin Kelly expressed scepticism regarding the effectiveness of the government’s latest assistance to Transnet in reorganising its operations. 

“Whilst this is heartening, Transnet has received allocations and presumably bailouts from Treasury before — and the question still remains whether the management, operational foresight and control that was required for many years, will now come into play. It has not done so before — so the question is whether this will ‘suddenly’ now happen – or are we to see a similar experience as happened with South African Airways, where countless “bailouts” occurred without the desired result,” Kelly told

Kelly further told the publication that the RFA is cognisant of the fact that capital expenditures are necessary for both equipment and infrastructure interventions, however, “It remains convinced that an attitudinal and management change is required within Transnet, as well as the core supportive SOEs that are in the logistics supply chain.”

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