11 April 2012
South African state transport and logistics company Transnet has announced the details of a R300-billion investment in infrastructure that it says will create over half-a-million new jobs while making its freight rail division the fifth-largest in the world.
Announcing South Africa’s new multi-billion rand infrastructure drive in his State of the Nation address in February, President Jacob Zuma highlighted two key goals of the programme: creating new jobs, and making it easier to do business in, and export from, the country.
Briefing journalists on Tuesday, Transnet CEO Brian Molefe said the state company’s prime objective was “to invest in building capacity to meet validated market demand that will enable economic growth”.
‘significant modal shift from road to rail’
South Africa’s rail, port and pipelines infrastructure would be significantly upgraded and expanded over the next seven years, resulting in “a significant increase in freight volumes, especially in commodities such as iron ore, coal and manganese,” Molefe said, while leading to a “significant modal shift from road to rail”.
The lion’s share of Transnet’s R300-billion capital investment programme, R205-billion, would be spent on rail projects – R151-billion of this on freight rail – as the company pushed to increase freight rail volumes from about 200-million to 350-million tons by 2019, while increasing its market share of container traffic from around 79% to 92%.
This increase would significantly reduce the cost of doing business in South Africa, Transnet said, citing internal studies showing that rail in the country was on average 75% cheaper than road transport.
A large-scale shift in freight transport from road to rail would also “address costs, congestion and reduce carbon emissions,” the company said.
Ports, pipelines, procurement, skills
Containers handled by South Africa’s port would grow from 4.3-million to 7.6-million TEUs, while petroleum products conducted via pipelines would increase by over 3-billion litres to more than 20-billion litres by 2019.
The associated procurement programme would boost local industry, with about half of the R78-billion set aside for locomotives to be spent on local suppliers.
And skills development would also get a big shot in the arm, with R7.7-billion to be spent on training by 2019, including R4.7-billion on bursaries and grants.
Transnet said that R213.6-billion of the required funding would be generated from operating cashflows, while the rest – R86.5-billion – would be raised on debt capital markets.
The capital investment programme was key to South Africa’s growth objectives, Molefe said. “This strategy aims to deliver a lasting economic, social and environmental value to society.”