South Africa’s transport and finance ministries have approved a 51-billion-rand guarantee facility to Transnet, the nation’s struggling rail and ports operator.
The facility is effective immediately to support Transnet’s “capital investment program and to enable it to meet its debt obligations,” the transport ministry said in a statement Thursday.
Transnet in its own statement said the facility will enable the company “to refinance maturing debt and ensure the organization’s continued access to adequate resources and facilities.”
The rand extended a decline following the announcement, to trade 0.4% weaker at R18.0262 per dollar by 12:46 p.m. In Johannesburg.
The package includes a 41-billion-rand loan guarantee for funding over the next two years, and a 10-billion-rand guarantee for managing cash flow related to debt payments and capital investments, the ministry said.
To raise funds on the back of the guarantees, Transnet will need to meet certain operational and logistics-sector reform conditions, similar to those required for a 47-billion-rand guarantee facility it received in 2023.
Transnet is trying to turn around its logistics operations, from rail to ports, after years of graft and mismanagement hollowed the business out.
Its debt stood at almost 138-billion rand as at end-March 2024.
Moody’s Ratings placed the company on review last week, warning that it will run out of money for operations and debt-servicing within three months unless it gets a government bailout.
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