It looks like government officials are not impressed with the way things are being handled at Transnet.
Government officials came down hard on the leadership of the state-owned enterprise (SOE) on Tuesday in a closed-door meeting with President Cyril Ramaphosa, according to two people at the event, as reported by Bloomberg.
Transnet CEO Michelle Phillips took the brunt of this chastisement, as officials are tired of Transnet’s poor performance.
The main issue was the company’s failure to lift freight volumes and its burden on government in the context of job losses.
The company is essentially costing the State hundreds of millions of rands that could be used to address the huge amount of unemployment.
There are currently around 8.3 million unemployed people in SA, according to the latest figures from StatsSA.
Transnet fails to empress
According to the two individuals at the meeting, in the last financial year, Transnet moved around 152 million tons of freight, and while this was up from the previous year by 3 million tons, it was way below the expected projections of 220 million tons.
This failure had a direct impact on mining companies and led to a number of job losses in the sector, according to officials.
If Transnet is “not able to get that volume out, specifically about 200 million tons per year, then we do sit with a significant challenge where we begin to see the impact on critical sectors,” Rudi Dicks, head of the project management office in the presidency, explained in the meeting.
The presentation by government showed a direct correlation between Transnet’s poor performance and its impact on South Africa’s economic growth.
“We’ve got to push and be much, much more ambitious,” Dicks said.
Transnet is hoping to move 170 million tons of freight this financial year. While this is an improvement, government officials noted that this was below contracted volumes.
The officials noted that Transnet needs more government oversight and better forecasting of volumes so the various sectors that rely on the SOE can better plan.
Officials also said that Transnet needs to move faster to find investment from the private sector.
Eskom on the mend
While Transnet continues to be the State’s problem child, its sister, Eskom, has addressed some of its major challenges.
Earlier this week, Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa told the media that the country’s power grid is expected to be strengthened by more generating units by the end of August.
“We are expecting Medupi Unit 4 to give us 800 megawatts (MW) and to fire up Kusile Unit 6, which is another 800MW,” he explained.
“We are hoping to get an extension of life of Koeberg Unit 2 and we are not complacent. We are doing everything by the book and we are still optimistic about getting that extension of life, and it will give us an additional 980MW,” the minister added.
He said that by the end of August, government expects the country could get a further 2,500MW from the Eskom fleet.
Business has reached out to Transnet for more information on the meeting and the immediate steps it will be taking to address its failures.
BUSINESS
