State-owned freight and rail group Transnet has moved to reconfigure its board, establishing a new subcommittee that will be responsible for, among others, the tracking and monitoring of business operations amid recovery and generational reforms taking place in the group.
The establishment of the business operations performance committee has been approved by transport minister Barbara Creecy, who has been at the forefront of ramping up and codifying the logistics sector’s once-in-a-generation reforms.
The six-member committee, chaired by engineer Refilwe Buthelezi, is packed with accounting, engineering and business turnaround skills. Former cabinet minister Sydney Mufamadi is also a member of the committee, as are Martin Debel, Busisa Jiya, Dipak Patel and Boitumelo Sedupane.
Transnet chair Andile Sangqu told Business Day the committee would not assume the functions of management, which remain the responsibility of the executive directors and other seniors.
“Transnet is a company in transition, with a number of key transformative initiatives under way. The company is implementing a corporate strategy intended to reverse historic underperformance and reposition it for growth, while preparing for open access in line with economic reforms as announced by the government,” Sangqu said.
“The board recognises its responsibility to steer the strategic direction of Transnet and ensure achievement of its strategic goals.
“Key to this is ensuring its oversight of the business operational performance, in alignment with the strategy of Transnet. The board has reviewed the committee structures of Transnet and identified the need to establish the business operations performance committee for this purpose.”
The Sangqu-led board was appointed two years ago, shortly after the group reported an operating loss of R5.7bn in the 2022/23 financial year.
In October 2023, the board approved a recovery plan for the business to address the identified challenges, which affected the operational business and overall financial stability of the group as the custodian of SA ports, rail and pipelines. The ultimate aim is to fix the operational constraints, so the group can move 250-million tonnes of goods by 2030.
Sangqu said the new committee will oversee business performance in operations and provide “strategic oversight and support to the executive management” on operational matters. It will also be tasked with ensuring that operational decisions are consistent with the strategic focus of the company and ensuring that decisions from the board and board committees are “adequately implemented and all action items timeously executed”.
The Buthelezi-led committee will also be empowered to review and recommend reports on critical strategic initiatives to deliver the targets in the corporate plan, and recommend remedial action for implementation.
Green shoots
Some green shoots have emerged from Transnet’s operations, with several mining groups saying they are starting to see the turnaround bearing fruit, while others — such as steel producer ArcelorMittal SA — have said the situation has deteriorated.
Richards Bay Coal Terminal (RBCT) earlier this year said that exports last year rose 10% to 52-million tonnes, from 47.2-million tonnes a year earlier, with the terminal targeting 55-million tonnes this year. RBCT’s performance in 2024 marks a stunning reversal in fortunes from 2023, when it exported 47.2-million tonnes, the lowest level since 1992.
Sangqu said through the recovery plan, Transnet had stopped the downward spiral in operational performance since implementation commenced in October 2023.
“The company has seen improved port and rail performance, largely due to a strong focus on improved availability and reliability of critical equipment and enhanced asset quality, including moving assets, such as rolling stock, port and marine equipment, and fixed infrastructure,” he said.
“Recent key highlights include improved port efficiency through targeted equipment investments; volume recovery across core rail corridors; and structural reforms through, among other things, the establishment of the Transnet Rail Infrastructure Manager (Trim).”
Cash-strapped Transnet, which reported a R2.2bn interim loss for the six months ended September, is expected to release its full results in the next few weeks.
Transnet Freight Rail (TFR), the largest operating division within Transnet, oversees an extensive rail network covering six key corridors stretching across 21,323km.
TRF’s vast rail network, plagued by theft and vandalism, needs about R14bn a year in investments to be revamped.
Creecy in December approved the publishing of the Transnet network statement, a major step in facilitating open access to the country’s rail network by third-party operators.
Trim is gearing up for the allocation of the first route slots to private trains after the landmark decision to allow third-party access to the country’s rail network.
Creecy, who has been in the role for just more than a year, earlier this year published requests for information to interested and affected parties regarding private sector participation in rail and port freight logistics projects.
The projects that have gone to market include the Northern Cape to Saldanha bulk minerals corridor, primarily for iron ore and manganese exports, and the Northern Cape to Nelson Mandela Bay corridor, primarily for manganese exports.
The request for information is not a formal procurement process but a mechanism to understand and source information from the market, with the government intending to publish requests for proposals in August.
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