Transnet has obtained a further R51bn in government guarantees, which the state-owned rail and port operator says will enable it to refinance maturing debt and access cash as well as improve and reform its operations.
The guarantee facility, which transport minister Barbara Creecy and finance minister Enoch Godongwana approved this week, adds to the R47bn made available to Transnet in December 2023, most of which has now been used.
The new facility comes as SA’s railways and ports are being opened to private companies to help modernise and expand the country’s ailing infrastructure. The process is expected to a lengthy one though, and Transnet is struggling to access the cash it needs to implement urgent upgrades to improve performance at the ports and prepare its rail network for new private operators.
Godongwana surprised the market when he mentioned off the cuff in his budget speech on Wednesday that he would consider further guarantees for Transnet. He has consistently refused to grant it an equity bailout, and the Treasury has been reluctant to extend further guarantees.
Transnet has instead applied for funding for specific projects — including upgrades to its automotive corridor and the Port of Cape Town — from the so-called budget facility for infrastructure.
But with more than R135bn of debt on its balance sheet, some of which is maturing soon, and still-poor operational performance constraining its revenue, Transnet faces liquidity challenges.
Last week, Moody’s put its rating of Transnet on review for a downgrade, citing its “growing concern over the company’s unsustainable capital structure and its deteriorating liquidity” position, and placed Transnet’s lopsided capital structure under sharper scrutiny.
Moody’s analysis casts doubt on Transnet’s ability to meet its obligations without intervention even as it acknowledged the parastatal still had R7bn in undrawn loans and remaining cash reserves from the end of March 2025.
The package Creecy announced this week includes a R41bn guarantee facility for Transnet’s funding requirements for the 2025/26 and the 2026/27 financial years, as well as a R10bn guarantee that Transnet will use for its liquidity management as it relates to the servicing of its maturing debt and capital investments.
Transnet welcomed the guarantee and said it was focused on sustainable growth and an improved performance. “The facility will enable Transnet to refinance maturing debt and ensure the organisation’s continued access to adequate resources and facilities to be able to continue its operations as well as fund the capital investment programme for the foreseeable future,” the utility said in a statement on Thursday. “It will also enable Transnet to focus on operational improvements and strategic reforms.”
The department of transport noted that Transnet played a central role in the economy and the government’s goal of inclusive growth even though it has been plagued by inefficiencies that have constrained freight transport and stunted economic growth.
Interim solutions
“The entity is currently engaged in a wide-ranging reform programme with the aim of improving operational performance in the short and medium term. This programme aims to overcome operational, financial and governance challenges, hampering its ability to fulfil its strategic role,” the department said in a statement on Thursday.
“Interim solutions to meet capital investment needs by the entity include project-based applications to the budget facility for infrastructure. Transnet is also working with the Treasury and the presidency to develop a joint collaboration and funding policy to support immediate capital improvements by the private sector in priority freight corridors.”
The R47bn facility of 2023 enabled Transnet to execute its recovery plan over the 2023/24 to 2024/25 financial years, which the department said had seen increased capital investments and improved liquidity.
“A guarantee framework agreement between the department of transport and the Treasury will include guarantee conditions that will be continuously reviewed and amended when deemed necessary. Any drawdowns will be subject to Transnet meeting these conditions,” the department said.
With Kabelo Khumalo
Update: May 22 2025
This story has been updated with additional information.
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