TRANSNET LTD


Overview

  • Reference: P-ZA-DC0-010
  • Approval date: 23/06/2010
  • Start date: 27/03/2012
  • Appraisal Date: 15/04/2010
  • Status: OngoingOnGo
  • Implementing Agency: TRANSNET SOC LTD
  • Location: NATIONWIDE

Description

The project consists of a loan to support Transnet's 5-year capacity expansion program. The program will include revitalizing and extending existing infrastructure (e.g. widening and deepening of ports, building a new pipeline and acquiring new locomotives) and addressing the maintenance backlog, especially at Transnet Freight Rail.


Objectives

The project will increase capacity from 177mtpa in 2010 to 249 mtpa by 2015 and will generate additional tax revenue of R 5.7 Billion by 2015


Rationale

Pillar I of the Bank's Country Strategy Paper (CSP) for South Africa is aimed at enhancing private sector competiveness through support for improved infrastructure. Emerging infrastructural challenges are already constituting a binding constraint on growth and denting South Africa's investment friendly image. The Bank's strategy under this pillar will support ongoing efforts by the government and its SOEs in responding to this emerging challenge. Transnet faces multiple constraints including

(i) ageing equipment and infrastructure that in many instances is close to getting past its useful life and

(ii) though currently profitable, not enough to finance major long-term capital intensive projects that would lead to the capacity expansion of the coal and iron ore transport line which would lead to an increase in South Africa's export potential and relieve pressure on the road network. The Bank's loan is expected to finance capitalised maintenance and help upgrade maintenance centres. As part of this program, aging equipment will be upgraded to prolong the useful life of the rail assets. Bank's participation in the Transnet capital investment program will directly support infrastructure development in South Africa and strengthen private sector activity in the country and the region.


Benefits

The project supports South Africa's national priorities and is well aligned with the Bank's country assistance strategy as well as the private sector priorities for infrastructure. The Bank will provide financing at adequate tenor and enable Transnet to implement its capital intensive program. Further the B-loan will increase Transnet's ability to attract funding from international lenders.

The implementation of the maintenance program by 2015 will lead to increased efficiency through a reduction of wagon cycle/turnaround times by 21.1%, a reduction of deviation from schedule by 26.8% (departures/arrivals), and an improvement of locomotive efficiencies by 33.2% (GTK/loco/month). It will contribute to lowering the cost of doing business in South Africa and increase exports of coal and iron ore.


Key contacts

DZIMIRI Paul - PISD2


Costs

Finance source Amount
ADBZAR 217,394,801
DeltaZAR 7,489
TotalZAR 217,402,290
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