“Bigger disaster than Eskom”

Experts believe Transnet poses a major risk to the South African economy due to poor decision-making at the state-owned entity, reports the Sunday Times.

African Rail Industry Association (ARIA) CEO Mesela Nhlapo said at a recent panel discussion that Transnet’s problems are deep and not being addressed appropriately.

Nhlapo stated that Transnet had revalued its property portfolio by R11bn — presenting what would otherwise have been a R6-billion loss as a R5-billion profit.

“When you interrogate their financial statement, you realise it is not a profit, or cash in the bank,” said Nhlapo.

“Transnet has created a fictitious impression that the company is OK by re-evaluating their assets. This is a short-term plug to a dam wall that will soon break.”

Transnet strike

Nhlapo added that the recent two-week strike at Transnet highlighted the importance of the company to the economy, as analysts estimate this industrial action caused approximately R1 billion in losses each day.

The strike began on 6 October after Transnet offered workers a 3% wage increase — well below the annual inflation rate of 7.6%.

United National Transport Union (UNTU) general secretary Cobus van Vuuren said the offer was “not aligned with the mandate that was given to us by the members.”

The effects of the strike were also felt in other countries, as the price of importing coal to Europe’s largest ports increased significantly.

Coal flow out of South Africa also dropped to the lowest levels in over a year during this period.

The strike finally ended on 18 October when UNTU accepted an offer of 6% and improved housing and medical benefits — but the economic effects of the strike action had already been felt — and highlighted the sector’s importance to the South African economy.

Huge risk to South African economy

South African Association of Freight Forwarders (SAAFF) CEO Juanita Maree stated that the scale of the challenges Transnet faces is incredibly high.

“Unless we fix it, we’ll probably have a bigger disaster than Eskom, and that is what policymakers or decision-makers fail to understand,” said Maree.

Maree called on the government to take responsibility for forging an environment that will allow the logistics sector to thrive.

“The private sector cannot create an environment, we can participate in an environment, but we need the government to create an enabling environment for us to work in,” she said.

“It does not matter how hard we shout, how badly we behave, if we don’t have a trust relationship.”

Transnet responded to Nhlapo’s statements by claiming that ARIA does not represent most railway operators, and should therefore not speak on behalf of the industry.

“The assertion by ARIA that the rail industry as it pertains to Transnet ‘poses a sovereign risk’ to the country is presented so skewly and laced with so many incorrect statistics that we can only view this as an attempt to create exaggerated alarm, with the view to argue for a collapsing industry to enable wholesale privatisation of the freight rail industry to benefit a few members of ARIA at the expense of national interests,” said Transnet.

Transnet also said that it has proactively been testing third-party access in the prevailing legislative landscape while it waits for the Department of Transport to develop a national rail policy implementation framework.

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Now read: Largest Transnet worker union agrees to end strike