25 November 2009
South African state transport company Transnet has signed a €200-million (about R2.2-billion) loan agreement with Agence Française de Developpement Group (AFD and Proparco) to partly fund the R4.6-billion expansion of Cape Town harbour’s container terminal.
“We are pleased at this historic partnership. This is by far the largest single funding initiative for one project,” Transnet acting CEO Chris Wells said in Cape Town this week, adding that the transaction was in line with the company’s strategy to diversify funding sources and investors for its investment programme.
“Apart from being a vote of confidence to Transnet’s sound management of its investment programme, especially the rigorous risk management framework, it is also a testimony to the attractiveness and bankability of all the projects we are undertaking as part of our five-year capital programme.”
According to Wells, the agreement with AFD is particularly attractive because, while it is denominated in euro, it can be disbursed in rands, a move that will boost Transnet’s ability to manage its financial risks, particularly foreign exchange risk.
The loan, which is repayable over 15 years, with a three-year capital grace period, will see the port’s container terminal capacity increased to 1.4-million TEUs per year by 2012, and forms part of Transnet’s R80-billion capital expenditure programme.
The work involves the deepening of the entrance channel, the basin, the refurbishment of the berths, the replacement of container handling equipment and acquisition of new equipment. It also involves the reconfiguration of onshore areas to provide additional stack capacity and to improve land access.
The conclusion of the loan agreement follows a thorough due diligence by AFD officials of the Cape Town Container Terminal expansion project.
“The AFD is a full supporter of Transnet’s expansion plans,” said AFD chief executive Jean-Michel Severino. “We believe this will build the port’s capability to meet the growing capacity demand.”
He said the agency was also confident that the agreement would play a major a role in stimulating the South African economy and sustaining the jobs for South Africans working at the ports and the construction companies implementing the project.
“Furthermore, the investment in the port of Cape Town fulfils a key component of AFD’s country partnership strategy for 2009-2011,” he said. “This addresses our aim to reinforce South Africa’s productive sector for providing financial support for investment programmes that have been developed by [the country’s state-owned enterprises].”
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