Cape Town — State-owned rail network, Transnet, has been given strict conditions over the use of it’s R47bn bail-out support package from National Treasury.
The crisis-hit company was handed a lifeline on Friday after National Treasury announced it would be receiving a support package of R47bn after Transnet’s woes had worsened.
“The Minister of Finance has concurred with the Minister of Public Enterprises, Pravin Gordhan, to issue Transnet with a R47 billion guarantee facility effective immediately in support of its recovery plan including meeting its immediate debt obligations,” Treasury’s statement read.
Despite the reprieve, the SOE will have to tread carefully as government will be keeping a close watch on Transnet’s operation and financial woes, EWN reported.
Transnet can only dip into 50% of of the guarantee granted by Treasury and can immediately use this deal with it’s debt obligations and to fund a recovery plan. Transnet’s debt stands at R135bn. The guarantee facility will help to settle any the existing debt.
Democratic Alliance (DA)’s Dion George has warned that this sets a dangerous precedent for other SOEs to bring out their begging bowls.
“No guarantee facility can address the root causes of this inefficiency and fiscal irresponsibility. In fact, the government’s safety net will ensure that the chaos is perpetuated while placing a substantial burden on our already strained national budget and further balloons our growing debt bubble.”
[Media Statement] The Minister of Finance has concurred with the Minister of Public Enterprises to issue #Transnet with a R47 billion guarantee facility effective immediately in support of its recovery plan including meeting its immediate debt obligations.#TransnetRecoveryPlan pic.twitter.com/Njv4ZM6LBB
— Transnet SOC Ltd (@follow_transnet) December 1, 2023
Compiled by Matthew Petersen