South Africa’s biggest political party will ask the National Treasury to consider a one-off debt-relief package for state-owned rail and ports operator Transnet before next month’s budget.
Transnet requires a similar package to one given to power utility Eskom Holdings in 2023, Zuko Godlimpi, deputy head of the African National Congress’s (ANC’s) economic transformation committee, told reporters on the sidelines of a policy-strategy meeting on Sunday. The Treasury granted Eskom a R254-billion debt-relief package two years ago.
“We need something massive for Transnet, once off, and it is quite vital because the survival of Transnet and its efficient operation is critical for the South African steel industry, the mining industry and the manufacturing industry,” Godlimpi said. “We don’t have the option not to rescue Transnet.”
Finance Minister Enoch Godongwana, who is also a member of the economic transformation committee, will deliver his annual budget statement on Feb. 19. He’s previously refused new bailouts for the country’s ailing state-owned companies unless they get their operations in order.
Rail inefficiencies cost South Africa’s economy more than 400 billion rand in 2022, according to the Treasury, while the nation’s minerals council estimates mining exports fell 50 billion rand short of target last year. The ports run by Transnet, which has R138-billion of debt, have been ranked among the worst in the world.
The Eskom debt-relief package gave the utility room to make “specific infrastructure interventions” that enabled its recovery,” Godlimpi said. South Africa has now gone more than 300 days without spontaneous power cuts which had weighed on the economy for 15 years.
The government will begin a two-day annual strategy meeting — known as a lekgotla — on January 29. Next month’s annual budget statement will be the first since last year’s watershed election in which the ANC lost its outright majority and was forced to enter a coalition with nine other parties.
BLOOMBERG