A laudable enterprise in many ways, the presidency’s government-business partnership is also politically adroit. A weakened state needs all the friends it can get. Originally established to hold off the three horsemen of economic apocalypse — load-shedding, logistics failures and crime — the question is whether those running key state-owned entities (SOEs) know it.
Households and businesses have helped by adding more than 6GW of solar capacity “behind the meter”, allowing Eskom to maintain its plants properly and resulting in some unedifying corporate comms overreach as load-shedding ceased.
Transnet was always going to be the harder nut to crack. Where Eskom needed to find a way to “call off the dogs” ransacking its plants and sit back while private solar installers added capacity, Transnet’s 20,000km railway network and shambolic ports — the world’s worst, by some measures — represent a different order of difficulty.
Transnet’s 20,000km railway network and shambolic ports — the world’s worst, by some measures — represent a different order of difficulty
In almost every report issued by every miner and large-scale manufacturer, by every exporter of citrus and importer of cars, Transnet’s performance is flagged as an impediment. The government knows it, too. In its Macroeconomic Review released last year at budget time, the National Treasury wrote of “deepening operational crises” and “cascading negative effects on the commercial prospects of business across the country”.
“This means that South Africa missed out on an aggregate of around R2-trillion of economic activity between 2011 and 2019 solely because of … Eskom and Transnet,” the Treasury wrote. Ouch.
In December, Transnet released a network statement that laid out how it plans to open its rails for private operators, the first of which have until early next month to get their bids in. After a bunfight over tariffs, Transnet seems to be approaching a Rubicon that was simply unimaginable just a few years ago.
However, it is prudent to leave the MCC in the fridge. As the bungled award of a key Durban container terminal concession to logistics giant Container Terminal Services — marked by what rival bidder Maersk described as a “litany of errors” — shows, Transnet lacks either competence or motivation.
Bear in mind, too, that if Transnet Freight Rail has the capacity to move as much as 300Mt a year, Transnet’s allocation of just over 2Mt for private operations amounts to less than 1% of capacity. Perhaps a cautious approach is wise, but it puts the excessive excitement of the logistics executives who want to run locomotives on Transnet’s rails into better perspective.
The network statement came just before the SOE reported widening losses at R2.16bn for the six months to September. It said it would need R65bn to increase tonnage from the 151Mt it moved in financial 2024 to 250Mt by 2029 — a somewhat ambitious target imposed by transport minister Barbara Creecy.
Where that R65bn will come from is not clear, but the Treasury should stand firm. Transnet needs to show with actions that it is committed to a new way of doing business. It must resolve the Durban concession mess and get Cape Town’s export terminal running at full capacity, and it must treat the early rail concessionaires like customers, not competitors.
By tying itself up in court over Durban’s Pier 2 and offering a minuscule fraction of its rail capacity for concession, Transnet is demonstrating that its monopolistic heart beats on. Until a wooden stake is driven through it, Mr Godongwana should keep his wallet in his pocket.
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