Business Leadership South Africa’s (BLSA) CEO Busisiwe Mavuso said the turnaround in the electricity sector is something to be proud of and hoped that the same work could be done to fix Transnet.
She acknowledged that Transnet leadership is making good strides, especially in engaging the private sector.
“Transnet’s new management team is making good progress on many fronts, but, particularly when it comes to drawing on the private sector, there is a limited conception of what is possible,” she said.
She added that Transnet is working on several public and private partnerships, including concessions for Richards Bay and Durban ports. However, compared to the electricity sector, which enabled a dramatic increase in investment, the steps taken on the logistics front are lukewarm.
“Transnet is struggling to raise finance, given its high debt level that is costing it R13 billion a year to service, including R60 billion of debt accumulated during state capture for which the utility received no positive value. It now faces a R51.4 billion maintenance backlog for network restoration while its fleet of locomotives is ageing rapidly,” Mavuso explained.
Private sector participation
She said that Transnet is working on several private sector partnerships, largely through “private sector participation” arrangements in which private investors contribute equity or operating leases.
“These are all well and good, but as the electricity experience shows, if the private sector is empowered to become a producer and supplier itself, rapid progress can be achieved.”
Mavuso used the toll roads as an example of how Transnet and the private sector have worked well together.
“The N1 and N3 toll roads were among the first public-private partnerships in our democratic history and enabled the rapid deployment of private capital to support economic growth,” she emphasised.
“Those deals made it possible for the private sector to build and operate the roads on 30-year concessions. The model has even worked for cross-border infrastructure, particularly the Maputo Corridor that links Johannesburg to Maputo.”
She called for Transnet to push the envelope, especially in its rail and ports sector.
“Concessions of whole rail corridors can be done. Whole ports can be concessioned. That could introduce real competition, with rail corridors and ports competing to provide the best and lowest cost services against each other,” Mavuso said.
The CEO vehemently believed that this would enable the economy to become far more competitive in servicing export markets, driving economic growth and creating jobs and tax revenue.
She did say that she is concerned about the policy environment for logistics in the future.
Mavuso is concerned that certain policies are making it hard for such important decisions to be made.
“It is entirely unclear what government department oversees our big state-owned enterprises. After the closure of the Department of State-Owned Enterprises at the end of the last election, the SOEs were initially being overseen directly by the presidency,” she said.
“They are in the process of moving to their policy departments, Eskom to energy, and electricity and Transnet to transport, but then they are supposed to be moving to a new SOE holding company once the relevant legislation is enacted,” she explained.
The business leader said that this will be a potentially long and confusing period.
“This is a potentially long and confusing period in which the kind of vision needed to drive a strategy for the sectors will be difficult to develop. It does not inspire confidence, given the kind of vision we need to ensure world-class logistics services for our country,” she acknowledged.
IOL BUSINESS