RYK VAN NIEKERK: Transnet introduced monetary outcomes for its fiscal yr to the finish of March 2022 this afternoon. I simply wish to point out first that the monetary statements are unqualified, which implies that the Auditor-General thinks they’re an correct reflection of the group’s monetary place. The Auditor-General certified the firm’s 4 earlier set of monetary statements as a result of, amongst different issues, irregular expenditure associated to state seize.
In the [2022] monetary yr Transnet’s turnover rose by practically 2% to R69 billion. The group earned a revenue of R5 billion following a loss of virtually R9 billion in the earlier monetary yr.
Joining me now’s Portia Derby. She’s the chief government of Transnet. Portia, thanks a lot on your time. Congratulations on attaining an unqualified or a clear audit, and likewise for the operational turnaround at Transnet, the place you truly made an honest revenue of R5 billion. Have issues now stabilised at Transnet?
PORTIA DERBY: Ryk, thanks very a lot and good afternoon to your listeners. I feel, greater than stabilisation, let’s say we expect we’re attending to the level the place we’ve reached the backside and we’re on the turning facet of the hockey stick. Yes, let me put it that manner as a result of, as we indicated in the presentation, we undoubtedly nonetheless have a methods to go in the case of income.
RYK VAN NIEKERK: You made a revenue of R5 billion, and are you going to declare a dividend to authorities?
PORTIA DERBY: No, as a result of, as we’ve been at nice pains to say, that’s an accounting revenue. We don’t have money but.
We’ve been at nice pains, even speaking to our personal employees, and saying, look, it’s an enchancment and no less than it helps us take care of the gearing, however till we get money and actual laborious money, we’re nonetheless in a bit of a decent spot going ahead.
But as quickly as the state of affairs modifications I feel we’ll proceed, as a result of it’s important – as an organization owned by a authorities. And in any case, not solely authorities, like all privately-owned corporations shareholders are speculated to make one thing out of your existence.
RYK VAN NIEKERK: I feel, to place it in a different way, you don’t require a bailout, nonetheless?
PORTIA DERBY: No, no, no. Ryk, I don’t [subscribe] to that notion of bailouts. In reality, I began studying a De Villiers report which got here out in 1987, when the Nat [Nationalist] authorities determined that they’d cease funding rail and we checked out the losses that Transnet, their predecessor, SATS, had made at the time, which was like R1.5 billion then. And then you definately comply with the path – no one’s ever recapitalised it. Remember, in 1985 we had a debt standstill in South Africa. So for me, the difficulty on authorities is that you just can not – and that is by and huge the identical problem with Eskom – say to an organization, ‘We set you free, go into the world’, after which we additionally offer you duties, with out making certain that you’re correctly capitalised. So you virtually make a travesty of the concept that you just’re speculated to be offering using least-cost logistics.
If I could, Ryk, take a look at how the Germans are offering fairly delicate assist for his or her exports. From 2020 to 2029, the German authorities is giving Deutsche Bahn – and it’s a grant – €63 billion, which is meant to refurbish and improve their rail system. Now Deutsche Bahn is the identical as us. It is a state-owned entity. It has another shareholders in it. But basically, if in case you have an organization which is meant to be driving German exports, which means with that a lot authorities assist it is ready to present low-cost logistic companies.
So I wouldn’t name it a bailout, however it’s how at present issues stand.
The solely dialog we’ve in the authorities is in so far as required by the National Rail White Paper, that paper clearly states that infrastructure needs to be funded by authorities.
So we’re speaking about funding infrastructure. But there’s no different cash that we require from authorities.
RYK VAN NIEKERK: I like your notion that Transnet has reached the curvy part of the hockey stick. What are your present priorities now, as a result of there are some scars from state seize? There’s a belief deficit, I feel, from many South Africans towards Transnet. So what do you consider your core challenges will probably be and your core priorities in the new monetary yr?
PORTIA DERBY: I’ll reply you in two methods. One, we put in the presentation what we regard as [the risk] that we face, after which I’ll come to having raised these dangers, what are the priorities that we expect are completely essential to assist take care of the dangers? This difficulty of liquidity – and liquidity is, when all is alleged and performed, money in the financial institution – is essential. And that implies that we’ve to drive income. We’ve performed, we expect, as a lot as we will probably do actually on the price facet. If you transcend this, you begin destroying the enterprise, truly, if you happen to drive [that]. So we expect we’re on prime of the prices. We might get extra financial savings, however they’re marginal relative to the profit we might get if we drove the progress of income.
We’ve additionally indicated the difficulty of gasoline and electrical energy costs as a share of our whole prices. In the subsequent monetary yr each are round 7% of whole prices, so that they’re not inconsequential and never unsubstantial.
Security. We’ll repeat that eternally, as a result of the safety’s impression [is] not solely on TFR [Transnet Freight Rail] – and TFR is our greatest income earner, manner over 50% in addition to on the pipeline. As you heard, that pipeline is the place we then carry the greatest environmental legal responsibility as a result of of the hazardous impression, or the impression of petrol merchandise and the threat to life and the setting.
And then lastly this difficulty of world warming, and the impression on infrastructure. We have needed to incur shut on R6 billion – about R5.5 billion – expenditure to repair the rail in addition to the port in Durban in consequence of the floods. That was not anticipated in any respect. It is essential that we repair that.
So what are the three areas that we’re specializing in on this monetary yr? Simply as a result of of the measurement of TFR, is the difficulty of safety, as we’ve indicated, working with authorities, but in addition asking some actually vital questions on how a lot of the safety we must always self-provide and the way a lot ought to come from the personal sector. We should reply that query.
Secondly, we want extra funding from authorities to have the ability to repair the infrastructure to the stage that we point out. Now we’ve indicated that we’re going to tier our rail system. We’ll have Tier A, Tier B, and Tier C. On all of that we’ll should agree with the regulator. It reduces the quantity of cash that you must spend, by and huge, as a result of on C you don’t spend the identical quantity as on A, however it locks in the expenditure that we should …. proceed to have an actual security licence ……
And then lastly, we’ve to get extra traction energy, which is extra locomotives. That’s an space that we’re pushing laborious as we get into August; it’s pressing that we discover extra traction energy. But as we ……we couldn’t go into the market to purchase extra locos [locomotives] till we understood that on the authorized course of, having put aside the 1 064 [locomotive supply] contract, that we might be secure to start out a brand new procurement course of.
RYK VAN NIEKERK: Yes, the locomotives are an enormous problem for Transnet, however you stated earlier that you’ll launch a young for extra locomotives at the finish of July. Are you continue to on observe to try this?
PORTIA DERBY: No, we’re not going to make July. We at the moment are the center of August. We completed all of the work that we wanted to do – enterprise circumstances, determining the kind of procurement – as a result of what we then should do is a short-term procurement train that offers with the fast disaster that we’ve, after which a longer-term train which might allow us to make sure that we, first of all, [can] do the factor that we’ve at all times wished, [which] was standardise our fleet, scale back the quantity of loco varieties, which might then assist us scale back the price of stock. And this time in the procurement we’re going to be asking much more for frequent elements between all of the locomotives, to allow them to be simpler to take care of and repair as properly. So that’s prepared. We ought to end all of the governance by late/center August.
RYK VAN NIEKERK: One of the key considerations about Transnet at present is efficiencies. We have a coal sector in addition to an iron-ore sector, that are completely depending on Transnet to maneuver their product. The extra Transnet can transfer, the extra they will export, and the extra they will export the extra money they make, and the extra tax they pay. There’s an enormous knock-on impact of elevated exports of these commodities. The key right here is for Transnet to have the ability to transfer extra product. What are your methods to attempt to enhance on these efficiencies?
PORTIA DERBY: Well, sadly, Ryk, till we get the extra traction energy, we’re placing as a lot cash as we probably can into upkeep of observe in order that we will take away velocity restrictions. Transnet Engineering has performed quite a bit of work [in] reverse engineering. So for instance [for] traction motors, we have been dependent, we have been ready for the Chinese to produce us and so they refused to present us the elements. But we’ve reverse-engineered that. But we will’t reverse-engineer each part in the loco as a result of, first of all, it’s costly, and it’s time-consuming. So the procurement of spares and elements is an enormous precedence, in addition to the locos. Until we get the traction energy we’ll actually wrestle.
What we did strive do final yr is [that] the mining sector stated to us they may procure for us, on our behalf, to bypass the Chinese who have been clear that they weren’t supplying us. And so we stated, tremendous, we made preparations and so they tried, and the Chinese shortly received to listen to that they have been procuring for us and so they blocked it.
So it’s actually a troublesome state of affairs, and that’s why getting to a degree the place our authorized technique strains up with the procurements is totally essential.
RYK VAN NIEKERK: So when do you assume it is possible for you to to get these locomotives and get efficiencies enhancing?
PORTIA DERBY: As I say, each day we’re working, we’re doing every kind of issues. Like on the North-East hall yesterday we ran for the first time a full [train] of 130 wagons of chrome, I feel it was. So we’re doing rather a lot of this stuff, however frankly till we get extra locos – on the extra locos, bear in mind, the authentic tender was for 1 064 locos, and we received solely 587 or so. So that hole is a spot that also continues to exist.
We will drive the income ….. we’ve received to get to a degree the place we’ve received stronger revenues than is at present the case. Third-party entry means bringing in the personal sector to function some of the corridors that we expect they may have the ability to function extra effectively than we [can].
RYK VAN NIEKERK: Portia, we’ll have to go away it there. Thank you. That was Portia Derby, the chief government of Transnet.