The South African government announced on Friday its decision to inject $2.5 billion in fresh support into Transnet, the state logistics firm facing significant challenges amidst a substantial backlog at ports.
A considerable number of containers remain stranded at sea near Durban port due to equipment malfunctions, causing numerous ships to divert to alternative destinations, stated officials.
In a bid to aid the company, which plays a pivotal role in the economy, the National Treasury unveiled a guarantee facility of 47 billion rand ($2.5 billion) to assist Transnet in meeting imminent debt obligations.
“The entity has suffered significant operational, financial and governance challenges in recent times and is struggling to fulfil this strategic role,” the Treasury said.
Transnet, responsible for operating Africa’s largest rail freight network and all ports, will immediately access 22.8 billion rand to address debt and other pressing financial requirements, according to the treasury.
Stringent conditions accompany the guarantee for the remainder of the funds, stipulated the treasury.
The company has grappled with long-standing challenges encompassing corruption scandals, theft, maintenance issues, and a colossal debt totaling 130 billion rand.
Its financial woes were compounded by a 5.7 billion rand loss for the year ending in March.
Durban port’s significant congestion, deemed “disastrous” for the economy by the leading opposition party, and similar struggles at Richards Bay port have exacerbated the situation.
Approximately 60 percent of the country’s container traffic traverses through Durban, as per the South African Association of Freight Forwarders (SAAFF).
SAAFF’s director Mike Walwyn informed AFP that around 15 cargo ships, carrying 40,000 containers, awaited docking on Friday, down from a peak of over 70,000 containers the previous week.
While there has been some improvement due to vessels redirecting to Port Louis in Mauritius, Walwyn stressed the urgent need for new equipment and expressed hope that the government’s funding would alleviate the situation.
