The bank founded by Brics members is considering extending an R18bn loan to Transnet to upgrade its locomotives.
The New Development Bank (NDB) aims to complete the transaction by the end of 2023 as part of its plans to further develop its $5.6bn portfolio in SA, according to the bank’s vice-president and COO, Vladimir Kazbekov.
The Shanghai-headquartered bank was formed to provide emerging-market economies with their own multilateral financial institution. It was founded in 2015 by Brazil, Russia, India, China and SA, which each contributed $2bn to the bank’s equity capital and each own a 20% stake. In 2021, the NDB initiated membership expansion and admitted Bangladesh, Egypt, United Arab Emirates and Uruguay as its new member countries.
“The loan itself will be for R18bn for Transnet for the modernisation of its locomotives,” Kazbekov said on Monday. “We are considering another big loan [for SA] for water and sanitation infrastructure.”
Guarantee
The debt will likely be guaranteed by the state in line with the bank’s requirements when lending to its member states.
Kazbekov’s comments follow finance minister Enoch Godongwana’s warning earlier in 2023 that Transnet was at risk of breaching agreed debt and profitability levels with international lenders.
Mining companies ranging from Thungela Resources to Kumba Iron Ore count billions of rand in lost revenue stemming from inefficiencies at Transnet.
The Minerals Council SA has previously said if the rail network were operating at full capacity, with a few minor enhancements the country would realise R151bn more in bulk mineral sales.
Aside from cable theft and vandalism, Transnet has been unable to run at full capacity because hundreds of its trains stand idle as it has been unable to procure parts from the biggest supplier, China Railway Rolling Stock Corporation, due to a long-standing impasse between the Chinese state-owned company and the SA Revenue Service and the Reserve Bank.
“Transnet is in discussions with a number of funding institutions, including the NDB, around possible funding for its capital projects. Any further communication will be done once these discussions have been finalised, and all governance processes concluded,” Transnet said in response to queries.
On Monday, Kazbekov and Percy Sechemane, CEO of the state-owned Trans-Caledon Tunnel Authority, signed a R3.2bn loan agreement for the development of the second phase of the Lesotho Highlands Water Project (LHWP), which aims to supply water to Gauteng, SA’s economic hub.
The project will involve the construction of a dam, a tunnel, roads, bridges, telecommunications and electricity infrastructure in Lesotho.
The project will be co-financed by the NDB, the African Development Bank and other lenders. Lesotho is not a member of the NDB, so the loan will be under the sovereign guarantee of the SA government.
“The SA government made the request [for the funding] and therefore they provide the sovereign guarantees,” Kazbekov said.
SA is a water-scarce country and Gauteng has faced water shortages in recent years. The LHWP is expected to increase water supply and security in Gauteng and other parts of SA.
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