Transnet next in line for privatisation push? Third party access to be finalised soon

Transnet on Monday provided an update on their progress in restructuring the state-owned entity (SOE).

The rail monolith is finalising a network statement that will see the SOE adopt a more business-friendly approach to operations and investment.  

In line with President Ramaphosa’s stated intentions to encourage public-private partnerships, doors will be opened for private entities to operate within the national network.

Restructuring Transnet for efficiency

The vertical separation of Transnet will have the SOE split into a division overseeing rail operations and a division in charge of managing infrastructure.

Transnet is to absorb what remains of the port authority into a corporatised entity wholly owned by the rail operator.  

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Corporatisation involves transitioning an organisation into a corporate structure run like a private business, while still maintaining government ownership.

“The corporatisation will establish Transnet National Ports Authority as a financially autonomous entity capable of generating its own revenue,” stated Transnet.

The completion of the plan is expected in the coming months and will stipulate the opportunities for private investment.

“Transnet looks forward to the publication of the final network statement and proposed tariff methodology to open slots for third-party access by 30 September 2024,” the entity added.

Selling of assets

Part of the structuring includes the sale of “non-core” properties and assets to generate cash and reduce overheads.

This is already in motion, with a list of applicable assets to be compiled during the current financial year.

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The business structures of the separate rail and infrastructure divisions are set to be concluded by 2025.

“These initiatives are a demonstration of Transnet’s commitment to the structural reforms in response to the changes in policy and regulations,” said Transnet Group Chief Executive, Michelle Phillips.

“In some cases, these changes entail entry of third parties in the rail and port networks, which is a necessary step to stimulate competition and address long-standing challenges such as underinvestment,” Phillips explained.

Union against privatisation

South African Airways’ failed privatisation deal resurfaced when Deputy President Paul Mashatile questioned the need for a government-owned airline.

ALSO READ: Deputy President Mashatile not ruling out SAA sale in the future – report

In response to Mashatile, the South African Federation of Trade Unions (Saftu) denounced all privatisation efforts.

“It is through public ownership that our historic demand for an affordable, reliable and safe transport system can be achieved for the poor working-class majority. This includes affordable planes, trains and buses,” stated Saftu General Secretary Zwelinzima Vavi.

Saftu believes that mentions of possible privatisation of SOEs have increased due to the ANC’s faltering at the polls.

“Bourgeois economists have thus found new confidence in calling for privatisation, backed by comments of people in government,” stated Vavi.