Transnet Infrastructure Programme: Delivery, beneficiation, job creation and skills development

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Public Enterprises

08 May 2012
Chairperson: Mr Maluleke. P. (ANC)
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Meeting Summary

Transnet briefed the Committee on its Capital Infrastructure Programme, noting that it intended to spend R300 billion over the next seven years. The presentation detailed the plans, capacity, proposed beneficiation, job creation and skills development. Transnet noted that the programme was aimed at expanding its rail, port and pipeline infrastructure in order to increase its ability to meet market demand, to achieve greater financial stability and strength, improve its productivity and operational efficiency, and support the shift from road to rail, a policy decision that aligned with government imperatives, including reducing carbon emissions and achieving economic growth.  Transnet would maintain a solid financial position and credit rating, with its gearing reducing from 43.2% in the 2011/12 financial year to 37% in the 2018/19 financial year. It intended to fund around 70% of the capital investment from operating cash-flows, and had plans to raise the balance externally. 58% of the spending would relate to expansion, and 42% to maintenance. The investments would be in general freight and freight rail, again geared to increase capacity to meet market demand volumes, from 79.7 metric tonnes to 170.2 metric tonnes. The Market Demand Strategy was intending to create jobs alongside Transnet’s other operations, with the numbers of jobs peaking at 588 000 people in the 2016/17 financial year. There was a major focus on skills and capacity building, with R7.6 billion to be spent on training over the seven years, whilst there had already been spending of R2.9 billion on local procurement by international suppliers. Assistance was to be granted to small business to foster innovation and create jobs, and approximately R4.2 billion would be spent over the seven years on small business promotion, whilst Transnet would continue collaboration with suppliers to ensure that Government’s transformation and empowerment objectives were met. Some of the major projects were listed, including development at the former Durban International Airport, Durban harbour, Cape Town Harbour, container terminals, the iron export corridor, export coal and manganese lines, and acquisition of locomotives and rolling stock. Port expansions were planned in Richard Bay, East London, Ngqura, Port Elizabeth and Saldanha, as well as a rail link with Swaziland and continued work on the new Multi Product Pipeline (NMPP). All infrastructure developments were in line with government objectives and it was working closely with the National Planning Commission and Presidential Infrastructure Co-ordination Committee, including exploring best funding models, and some of the key national developments were described.

Members asked to be kept informed throughout the process, raised questions on whether this plan also addressed the position of the existing Transnet pensioners, in addition to new employees, questioned if all costings had been taken into account to avoid the situation where Transnet would have to request more money later, as had happened in the past, and enquired about the benefits of the plans to ordinary South Africans. They also asked how many of those trained would be employed by Transnet, why no specific mention was made of other role players who would have to assist with funding, whether rail freight ability was up to scratch to deliver, why state owned enterprises were no longer declaring dividends, and what benefit they were offering back to government. Questions were also raised about incorrect spending of R8.4 billion in the last year, and whether this could be recovered, Transnet’s operations on the Continent, its fraud prevention plans, the gearing of Transnet, and why it had opted to build rather than to improve existing infrastructure in some areas.

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