Transnet boss Michelle Phillips has told Gulf investors that the state-owned group is open for business and on a path to recovery, as it prepares to usher in the biggest reform in its history — one that will see the private sector play a far greater role in its operations.
Phillips was in Dubai this week for Standard Bank’s State-Owned Companies Investment Summit, where the audience included deep-pocketed Middle East investors such as sovereign wealth funds — a crucial constituency as Transnet seeks to invest about R125bn in its operations and infrastructure over the next five years.
Phillips told the investors that two of the projects for which the company is looking to woo private investments, Ngqura and Richards Bay, were at an advanced stage for going to market — with all hands on deck at Transnet to meet the target to move 250-million tonnes of cargo by 2030 — from the current 160-million tonnes.
“The most ready private sector participation (PSP) right now is the Richards Bay dry bulk terminal. We expect to go to market in November for partners for Richards Bay dry bulk terminal. The potential there is for the terminal to go from moving 18-million tonnes to 28-million tonnes,” Phillips said.
“We need to modernise that terminal. It is going to be a mega chrome facility. We need it mechanised and automated so that it can move as much as it possibly can.”
Phillips added that the plan to rope in private sector players at the Port of Ngqura, or Coega, will take a major leap forward in January through a market-sounding exercise inviting bidders.
The project incorporates the Ngqura manganese export facility, together with the rail corridor.
“We need to build a new facility because the Gqeberha facility is beyond its design life. We think the investment there will be upwards of R30bn.”
This year’s summit, which ended on Wednesday, was held under the theme “Unlocking Infrastructure Capital for Africa — Resilience through Reforms”, with the organisers highlighting the “urgent need to mobilise capital from Middle East-based investors” to support SA’s infrastructure priorities.
Middle East investors have over the past few years been investing heavily in Africa’s port network and critical minerals.
The United Arab Emirates maritime giant DP World has significant exposure to Africa’s ports sector.
Transnet’s flagship PSP project at Durban Container Terminal Pier 2 (DCT2) is held up in the courts after a losing bidder successfully interdicted the multibillion-rand project.
International Container Terminal Services Incorporated (ICTSI) was chosen as the preferred bidder by Transnet but rival bidder APM Terminals objected, alleging that ICTSI was unfairly favoured by the state-owned freight and rail group.
Judgment on the main application by APM to set aside the 25-year contract is yet to be finalised. APM’s bid was R2bn lower than the R12bn put on the table by ICTSI to operate the terminal for at least 25 years.
DCT2 is Transnet’s biggest container terminal, handling 72% of the Port of Durban’s throughput and 46% of SA’s port traffic. About 48% of SA’s citrus exports are loaded at DCT2.
Correct decision
Phillips told investors that Transnet hoped the court would arrive at a “correct decision”.
Phillips was appointed to the role in March 2024 following the exit of key executives after poor performance by the group.
The poor performance, which among others things saw record congestion at key ports, saw the exodus of former group CEO Portia Derby, CFO Nonkululeko Dlamini, chair Popo Molefe and Transnet Freight Rail (TFR) CEO Siza Mzimela.
Phillips also took investors on board on the reform of the rail network, which is also on the cusp of opening up to private sector operators.
She said there would be another iteration of the network statement that would be published before year-end, which would take into account industry feedback after the publication of the initial statement in December 2024.
“The important thing is to get private players into the system and to support them. We do see the network statement coming out with a few changes. The network is deteriorating as we speak. We are doing a lot of work to get the network up to the right standard,” she said.
In December, transport minister Barbara Creecy published the Transnet network statement, a major step in facilitating open access to the country’s rail network by third-party operators — a move welcomed by the business community and industry players.
However, Transnet needs about R14bn a year of investment in its six corridors, which have been plagued by theft, vandalism and outdated systems.
The Transnet Rail Infrastructure Manager, recently separated from TFR, concluded a process to appoint 11 train operating companies selected from 25 companies that applied to operate on Transnet’s freight rail network.
The operators are expected to carry 20-million tonnes of freight annually, easing pressure on Transnet. The group is aiming to move 250-million tonnes by 2030, from 160-million tonnes at present.
Phillips gave an update on the behind-the-scenes work being done to fast track the participation of the selected operators on the rail network, which includes giving the operators to the group’s underused wagons and locomotives.
“We are sitting with a large fleet of assets [wagons and locomotives] that are either largely underutilised or not utilised at all. Some of them are old and require major refurbishments. The train operating companies have started to make enquiries on these assets,” Phillips said.
Agreements
“We have been entering into tactical lease agreements with them. We have been taking them to see the fleet and they have been identifying what they want. New equipment is very expensive and takes about three years. This is an attempt by us to assist the private operators to get into the system sooner rather than later.”
Transnet’s year-ended-March results showed it was making headway in its turnaround blueprint, narrowing losses to R1.9bn compared to R7.3bn in the prior financial year — an improvement of 74%.
The group, which has a R144bn debt pile, is overly reliant on government guarantees to meet its debt obligations.
Phillips’s last message to investors was that progress was being made and the group was renegotiating some of its lender agreements to reduce finance costs.
The company pays about R1bn a month to service its debt.
“At the moment it is like paying a bond [mortgage] with a credit card,” she said. “Every investor should be able to see the potential in this business. We are managing it prudently.”
Correction: September 25 2025
This article was corrected to reflect that the summit was held in Dubai.
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